In Michigan, businesses are allowed to incorporate, thereby becoming their own legal entities. An incorporated business acts in its own name, whether buying and selling property, agreeing to contracts or exercising legal rights. To incorporate in Michigan, a business must file with the Secretary of State in compliance with particular guidelines.

Benefits of Incorporation in Michigan

Certain advantages inure to a business in Michigan 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. Furthermore, a business that has not incorporated puts the unnecessary burden on creditors in the Kingsford area to evaluate the credit worthiness of individual owners rather than that of the business, making loans more difficult. 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 comes at a price. First, Michigan 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 Kingsford lawyer.