For businesses seeking identification as separate legal entities, New York law allows them to undergo the process of incorporation. 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. A business looking to incorporate in New York must file with the Secretary of State in accordance with established guidelines.
Benefits of Incorporation in New York
Certain advantages inure to a business in New York 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 Fayetteville area prefer to evaluate the credit worthiness of a business as a whole rather than that of individual owners. This makes the process of receiving corporate loans simpler. Lastly, 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
Along with a possible fee to apply for incorporation in New York, there are other costs that corporations incur. The most important is that 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 Fayetteville lawyer, you can avoid this disadvantage.