There are some tax benefits out there that only the corporations are getting. Companies are tempted to incorporate for a number of reasons, but taxes are the main motivator. When a company becomes a corporation it becomes a separate entity of its owner. Thus it adheres to different rules than it did before. Depending on the state, a corporation may have to pay little to no income tax.
You can expect that the income tax for a corporation may be significantly lower than personal income tax. If you want to get the most for your money when you incorporate, you must play an active role in the process of turning your company into a corporation. Each company has its own individuality and ambitions and of course net profits, so some tax benefits may be more disposable than others.
A corporation is a state law-approved legal structure in which the business is a separate legal entity from its owners. You may own all of the stock in the corporation and you may be its only employee, but when you form a corporation, you and it become separate legal entities.
Because a corporation is a legal entity, its organization and operation procedures are governed by very specific state laws. These laws often vary from state to state. However, the corporate elements and procedures are generally the same for forming all types of for-profit corporate entities.
The following are the eight basic steps to incorporating your proposed or existing business.
1. Choose And Reserve A Corporate Name
2. Select A Corporation Type
3. Decide Where You Will Incorporate
4. Create A Pre-Incorporation Agreement
5. Prepare And File Articles Of Incorporation
6. Prepare Corporate Bylaws
7. Record Minutes Of Your First Board Of Directors Organizational Meeting
8. Issue Shares Of Stock
It is a personal decision to incorporate or not but you should make that decision based only on research and the answers you receive from a qualified CPA. By reviewing your situation, the CPA should be able to advise you what would be best for your situation. Don’t make spur of the moment decisions. Run your truck as a business and make your decisions based on the fact it is a business. The papers for incorporating can be filed by yourself or you can hire someone to do it. Make the decision based on your knowledge, ability and what is best for the business.