For businesses seeking recognition as separate legal entities, Ohio 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 Ohio, the process of incorporation is begun by filing with the Secretary of State in accordance with particular guidelines.
Benefits of Incorporation in Ohio
There are distinct benefits to incorporating a business. Most importantly, liabilities the business accrues may be satisfied only by assets that the owners have specifically invested in it. Had the business instead remained a collection of the owners' personal assets, the personal property of the stakeholders could be liquidated to pay the liabilities of the business, if it runs into financial problems. A corporation also allows creditors in the Berea 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
There are costs associated with incorporation, both short and long term. First, businesses in Ohio 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 Berea lawyer.