Under Pennsylvania law, a business may incorporate. If it chooses to do so, it is thereafter identified as its own legal entity. This means that the business can buy or sell property, offer and accept contracts and exercise legal rights in its own name. A business looking to incorporate in Pennsylvania must file with the Secretary of State in accordance with established guidelines.
Benefits of Incorporation in Pennsylvania
There are distinct advantages to incorporating a business. Most importantly, liabilities the business accrues may be satisfied only by assets that the owners have specifically invested in it. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. A corporation also allows creditors in the Elizabethtown area to assess the credit worthiness of the business as a whole rather than that of its owners, allowing the business to get loans more easily. 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
There are costs associated with incorporation, both short and long term. First, businesses in Pennsylvania might 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 may be avoided with proper planning and assistance from a local Elizabethtown lawyer.