For businesses seeking recognition as separate legal entities, New York law allows them to undergo the process of incorporation. An incorporated business acts in its own name, whether buying and selling property, assenting to contracts or exercising legal rights. In New York, the process of incorporation is begun by filing with the Secretary of State in accordance with specific guidelines.
Benefits of Incorporation in New York
An incorporated business enjoys certain benefits, the most important being a limit of liability for the shareholders. The most shareholders can lose is the amount they invest in the business. Without incorporation, the personal property of business owners is at stake should the company become unable to pay its debts. A corporation also allows creditors in the Valley Stream area to assess the credit worthiness of the business as a whole rather than that of its owners, allowing the business to obtain loans more easily. 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
Along with a possible fee to file 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 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 Valley Stream lawyer.