In Kansas, businesses are allowed to incorporate, thereby becoming their own legal entities. After incorporation, buying and selling property, agreeing to contracts and exercising legal rights are considered acts of the business itself and not its owners. To incorporate in Kansas, a business must file with the Secretary of State in compliance with particular guidelines.
Benefits of Incorporation in Kansas
Certain advantages inure to a business in Kansas that has incorporated over one that has not. First, a corporation's liabilities can never go beyond the amount invested in the business by the owners. Without incorporation, the personal property of business owners is at stake should the company become unable to satisfy its debts. A corporation might also find it easier to finance itself through loans, allowing creditors in the Lawrence area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Finally, a corporations charter requires that ownership be divided into stakes or "shares" of stock, all of equal size. This makes the process of transferring control much more practical.
Costs of Incorporation
Incorporation can be costly. First, a modest filing fee might be charged in Kansas for any business that wants to incorporate. Also, a corporation is taxed as its own entity. Disbursements to the owners of the corporation are also taxed as individual income, so this means earnings might be taxed twice. But this double taxation can be avoided with proper planning and help from a local Lawrence lawyer.