In Louisiana, businesses are allowed to incorporate, thereby becoming their own legal entities. After incorporation, buying and selling property, assenting to contracts and exercising legal rights are considered acts of the business itself and not its owners. A business seeking to incorporate in Louisiana must file with the Secretary of State in accordance with established guidelines.
Benefits of Incorporation in Louisiana
Certain benefits inure to a business in Louisiana 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. Had the business instead remained a collection of the owners' personal assets, the personal property of the stakeholders could be liquidated to pay the liabilities of the business, if it runs into financial problems. Furthermore, a business that has not incorporated puts the unnecessary burden on creditors in the Covington area to evaluate the credit worthiness of individual owners rather than that of the business, making loans more cumbersome. Finally, the ownership of a corporation is divided into an abundance of equal portions or "shares" of stock. Without this mechanism, transferring ownership of a business would be impractical.
Costs of Incorporation
There are costs associated with incorporation, both short and long term. First, businesses in Louisiana may be charged a fee 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 Covington lawyer, you can avoid this disadvantage.