In Massachusetts, businesses are allowed to incorporate, thereby becoming their own legal entities. When an incorporated business acts, whether it is to buy and sell property, agree to contracts or exercise legal rights, the process is then attributable to the business itself and not its owners. To incorporate in Massachusetts, a business must file with the Secretary of State in compliance with particular guidelines.
Benefits of Incorporation in Massachusetts
Certain advantages inure to a business in Massachusetts 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. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. Furthermore, banks in the Andover area prefer to evaluate the credit worthiness of a business as a whole rather than that of individual owners. This makes the process of getting corporate loans simpler. Finally, a corporation's ownership stake is divided into equal slices or "shares" of stock, which make investments in the business much easier to transfer.
Costs of Incorporation
Incorporation comes at a price. First, Massachusetts might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. The incomes of owners as individuals are also taxed of course, meaning that income to the corporation might be subject to double taxation. However, this disadvantage can be avoided with proper planning and help from a local Andover lawyer.