For businesses seeking recognition as separate legal entities, Nebraska law allows them to undergo the process of incorporation. As a separate entity from the owners, the business is then considered to be functioning on its own when it buys and sells property, assents to contracts and exercises legal rights. The office of the Secretary of State is the agency that receives applications for incorporation in Nebraska, and they must be completed in conformity with certain guidelines.
Benefits of Incorporation in Nebraska
Advantages 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. If the business had remained a personal asset of the owners, they would run the risk of losing their personal property to pay for the company's financial liabilities in case of default. A corporation may also find it easier to finance itself through loans, allowing creditors in the Gretna area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Lastly, 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
There are costs associated with incorporation, both short and long term. First, businesses in Nebraska may be charged a fee to incorporate. Also, a corporation is taxed as its own entity. The individual incomes of owners who are paid disbursements from the corporation's earnings are still taxed as well. This is called double taxation, but it can be avoided with proper planning and assistance from a local Gretna lawyer.