Under Pennsylvania law, a business may incorporate. If it chooses to do so, it is thereafter recognized as its own legal entity. This means that the business may buy or sell property, offer and accept contracts and exercise legal rights in its own name. A business seeking to incorporate in Pennsylvania must file with the Secretary of State in accordance with established guidelines.

Benefits of Incorporation in Pennsylvania

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. With unincorporated businesses, personal property of owners can be liquidated in order to satisfy the liabilities of the business. Also, creditors in the Ephrata area typically prefer to deal with corporations, since a loan is an investment more easily evaluated when the credit-worthiness of various owners is not an issue. Finally, 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

Along with a possible fee to file for incorporation in Pennsylvania, there are other costs that corporations incur. The most important is that a corporation is taxed as its own entity. Disbursements to the owners of the corporation are also taxed as individual income, so this means earnings may be taxed twice. But this double taxation can be avoided with proper planning and help from a local Ephrata lawyer.