In Kentucky, 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 Kentucky, a business must file with the Secretary of State in compliance with specific guidelines.
Benefits of Incorporation in Kentucky
Benefits of incorporation are many. The primary benefit is that the liabilities of the business can only be satisfied by the assets specifically invested into the company by the owners. Had the business remained unincorporated, owners risk losing their personal property should the business become unable to pay its liabilities. A corporation also allows creditors in the Berea area to assess the credit worthiness of the business as a whole rather than that of its owners, allowing the business to get loans more easily. Finally, the ownership stake in a corporation can be apportioned into uniform slices, known as "shares" of stock. This makes it possible to sell ownership investments in more manageable slices.
Costs of Incorporation
Incorporation can be costly. First, a modest filing fee might be charged in Kentucky for any business that wants to incorporate. Also, a corporation is taxed as its own entity. The individual incomes of the owners are still taxed also, and this can mean the same income is taxed twice, known as double taxation. With proper planning and assistance from a local Berea lawyer, you can avoid this disadvantage.