Incorporate in Southfield, MI

If you are considering whether to incorporate, you need to understand the basics about incorporation along with the advantages and disadvantages. Not every business is best suited for incorporation. But when incorporation is right, you benefit in a number of ways.

What is a corporation?
A corporation is a legal entity separate from you and your personal assets. A corporation can own property, do business, and maintain a bank account under its corporate name. A board of directors manages the corporation, makes important financial and business decisions, and appoints staff to run the company's daily operations.

Types of incorporation
There are basically two types of incorporation—C corporations and S corporations.

C corporation
A C corporation is taxed twice—first for the net profits of the company and second for the profits shareholders receive through stock dividends.

S corporation
An S corporation is a pass-through entity, which means taxes pass through it to the owners who pay taxes based on their income derived from the corporation. There is no double taxation that occurs at the shareholder level with an S corp. An S corporation gets its name from Subchapter S of the Internal Revenue Code

Articles of incorporation and by-laws
Both C and S corporations must be established through articles of incorporation and have bylaws for company operation.

Corporation advantages
Advantages of incorporating include:

Liability protection. You are not personally liable for company operating losses. Corporations can also claim unlimited losses, whereas unincorporated businesses have limitations on claiming losses.

Company benefits. Corporations can offer retirement and medical plans to employees and contribute more to such plans than companies that are not incorporated.

Tax advantages. Profit left in the company is taxed at a different rate than profits received as a salary. Accountants can often minimize taxes by advising how profits are paid out or kept in the company. For example, while all income for a sole proprietor is taxed at a certain rate, say approximately 15 percent, in a corporation, only the salaries are taxed at this rate, not the company's profit.

Asset leasing. By leasing assets to the corporation, you can receive rental income from the corporation, which permits deductions for interest, depreciation, repairs, insurance, and administrative costs.

• Business Planning & Consulting
  o Business Planning
• Incorporation Service

Reviewing options with incorporation attorneys in Southfield can help you decide whether incorporating is the right decision.