For businesses seeking identification 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, agreeing to contracts or exercising legal rights. The office of the Secretary of State is the agency that receives applications for incorporation in Ohio, and they must be completed in conformity with particular guidelines.
Benefits of Incorporation in Ohio
An incorporated business enjoys certain advantages, the most important being a limit of liability for the shareholders. The most shareholders can lose is the amount they invest in the business. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. A corporation might also find it easier to finance itself through loans, allowing creditors in the Hamilton area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Lastly, ownership of a corporation is divided into equal portions or "shares" of stock, which may be bought and sold much more easily than the ownership of an unincorporated business.
Costs of Incorporation
Incorporation can be costly. First, a modest filing fee might be charged in Ohio for any business that wants to incorporate. Also, a corporation is taxed as its own entity. In other words, the profits a corporation makes are now taxed separately, while any disbursements to shareholders are taxed as individual income. This is called double taxation. However, a business might avoid this disadvantage with proper planning and assistance from a local Hamilton lawyer.