Under Pennsylvania law, a business may incorporate. If it chooses to do so, it is thereafter recognized as its own legal entity. As a separate entity from the owners, the business is then considered to be acting on its own when it buys and sells property, assents to contracts and exercises legal rights. To incorporate in Pennsylvania, a business must file with the Secretary of State in compliance with specific 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. Without incorporation, the personal property of business owners is at stake should the company become unable to pay its debts. Furthermore, a business that has not incorporated puts the unnecessary burden on creditors in the Latrobe area to evaluate the credit worthiness of individual owners rather than that of the business, making loans more cumbersome. 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
There are costs associated with incorporation, both short and long term. First, businesses in Pennsylvania may be charged a fee to incorporate. Also, a corporation is taxed as its own entity. The incomes of owners as individuals are also taxed of course, meaning that income to the corporation may be subject to double taxation. However, this disadvantage can be avoided with proper planning and help from a local Latrobe lawyer.