When you incorporate a business, you create a separate legal entity. A company is formed when articles of incorporation are filed with the state to create a new entity. These documents detail the shareholders and other important information about the new company. Incorporating a business limits the liability of the owners and directors of the company. Incorporating also provides a corporate veil that protects the business from personal liability.
What is Meant by Company Incorporation?
Incorporated companies have directors that are elected by the shareholders. The directors must act in the best interests of the company, which has its own legal identity. The articles of incorporation can list a single director or several directors, depending on the company’s size. Directors are not personally liable for the debts of a corporation, with the exception of fraud and specific tax statutes. Before you incorporate a company, be sure to consult with a legal professional so that you don’t create legal liabilities.
Whether a small or large corporation, incorporating a business is a good idea. The advantages of incorporation outweigh the disadvantages Singapore new company incorporation. While a small business can benefit from the advantages of a corporation, it also has its disadvantages.
A corporation can suffer from double taxation because the owners of the business are taxed individually, whereas sole proprietors or partnerships do not pay taxes at the business level. A corporation may also be required to file a corporate tax return. This means a corporation has more organizational requirements and documentation than a sole proprietorship or a partnership.