As well as the benefits already mentioned, there may also be tax advantages to incorporating your small business.
Some incorporated businesses can delight in lower taxation rates following business incorporation compared to partnerships and sole traders. Other taxation benefits of small business incorporation are that once incorporated, many additional items of expenditure become tax deductible.
This article provides a brief explanation of some of the basic contract terms that are typically incorporated into business agreements.
Consideration. Representations and warranties are critical in many business contracts, and can serve multiple purposes. In addition to non-competition covenants, non-solicitation and non-disclosure provisions are also available to protect contracting parties’ business interests and intellectual property. Termination Rights
An often over-looked consideration in developing business relationships is the parties’ respective rights of termination. Integration
The differences between an incorporated business and an unincorporated business include issues such as liability, taxation and life of the business. An incorporated business must form by filing the appropriate documents with the state. Liability
An incorporated business shields the personal assets of the business owners from the claims and obligations of business creditors. Owners of an incorporated business have limited liability for debts and obligations that occur while operating the business. The business creditors of an unincorporated business may pursue the personal assets of the owners in an attempt to recover business debts.
Taxation. Unincorporated businesses are generally considered as pass-through entities. Owners of an incorporated business pay taxes again on the same dollars, when dividends from the company are taxed on their individual tax returns. Unincorporated businesses are not subject to double taxation.
Stock. Unlike an unincorporated business, an incorporated businesses has the ability to issue stock to investors. Unincorporated businesses can't issue stock.
An incorporated business may have more credibility than an unincorporated business, since an incorporated business appears as a more enduring business structure. According to the Workz website, incorporated businesses may be viewed as having a higher degree of professionalism in comparison to an unincorporated business. Furthermore, incorporating a business may send a message to existing and potential customers that the business is here to stay.
An incorporated business may have a perpetual existence. An unincorporated business may cease to exist upon the death or withdrawal of a business owner.
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Business Terms Explained Incorporation
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