why do i need a lawyer to incorporate

Full Answer

Do I need a lawyer to incorporate my business?

When you make a decision to incorporate, you can do it yourself without hiring an attorney. But that isn't always the ideal decision. It is relatively easy to set up a corporation. Many states have forms online to set up a corporation. Essentially owners need to do the following: Select and reserve a name for the business.

Why should I incorporate my business?

Incorporating or forming an LLC allows you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability. The chart below can help you in your decision-making:

How can a legal consultation help with incorporation?

A legal consultation can help an owner determine which corporate entity will be most advantageous and how to get the most out of incorporating the business. Attorneys can also highlight the downfalls of different entities in terms of liability and tax, as well as show you how each different option will have varying effects on the business.

Is it cheaper to incorporate or hire a personal injury lawyer?

It is definitely tempting to incorporate on your own because it's less expensive than hiring an attorney. "While state fees generally total between $100 and $250, the average attorney charges that by the hour," says Matthew A. Dolman, a Florida-based attorney with Sibley Dolman Gipe Accident Injury Lawyers, PA.

Do you need a lawyer to incorporate in Canada?

The minute book and by-laws Although any federal or provincial corporate registration authority allows you to register a corporation without the assistance of a lawyer, they do not provide you with the documents that establish the corporation: articles of incorporation, by-laws and minute book.

Do I need a lawyer to incorporate my small business Ontario?

There is no legal requirement to retain a lawyer to incorporate a company. Any person can incorporate a company, however, there are many benefits in utilizing a lawyer to help incorporate a company for you.

What are three reasons to incorporate?

Here's why.Protecting Your Assets. One of the main reasons most small business owners chose to incorporate is the issue of business liability. ... Credibility. A second reason many small businesses choose to incorporate is to benefit from the added credibility of being an official corporation. ... Taxes.

Is it worth becoming incorporated?

When you incorporate, owners or shareholders are not personally liable for the business's actions and debts. Any claims against the corporation are not the owner's responsibility, preventing the owners' personal finances from being affected. It can protect owners from things like lawsuits, debt, and financial losses.

Do I need an accountant to incorporate?

There's no legal requirement to consult with a lawyer or accountant in order to incorporate, and it is possible to incorporate online on your own. A lawyer and accountant can help ensure that your company is set up properly. Companies have to create and maintain a minute book.

Can I incorporate myself in Ontario?

In Ontario, you have two ways to incorporate a business. You can either manually prepare and file Articles of Incorporation or you can use a third party portal to incorporate the business online or electronically.

Why would someone want to incorporate a business?

Incorporating provides liability protection As a sole proprietor you're responsible for the liabilities of your business, and your personal assets can be seized to pay off company debt. If you incorporate, your personal assets are better protected any legal challenges your company may face.

What is the best reason to incorporate your business?

Asset Protection. One of the primary reasons businesses incorporate is to protect the personal assets of the owners. When you incorporate your business, a separate legal entity is formed. This means your business can accumulate assets and debts, separate from your personal assets and debts.

What are the reasons to incorporate?

Reasons to IncorporateSeparate Personal From Business. ... Prevent Misunderstandings Among Founders/Partners. ... Allows You to Issue Stock Options. ... Allows You to Get Funding and Establish Business Credit. ... Gives Your Business More Credibility. ... Adds a Layer of Privacy. ... Offers Potential Tax Benefits.

What are 4 disadvantages of incorporating?

Disadvantages of IncorporationFormalities and Expenses.Corporate Disclosure.Separation of control from ownership.Greater Social Responsibility.Greater Tax Burden in Certain Cases.Detailed Winding Up Procedure.

How much money should I make before incorporating?

From a tax perspective, there is no magic number of earnings that says when you must incorporate. Basically, if your business is earning more than you need to match your lifestyle, you'll be able to take advantage of tax deferral.

Why would I incorporate my name?

The benefits of incorporating yourself include giving you increased protection over your personal assets, easier access to capital, giving your business more credibility, more anonymity, tax advantages, existing into perpetuity, access to more affordable health insurance, and having a lower risk of being audited after ...

Can I incorporate with an online service or do I need a lawyer to incorporate?

The short answer is “no.” You cannot incorporate using an online service. There are many online services that claim to incorporate your business fo...

What happens if I do not complete step 2 of the incorporation process?

Your corporation is not compliant with its legal obligations under the Ontario Business Corporations Act (OBCA) or the Canada Business Corporations...

Do I really need a lawyer to incorporate?

While it is possible to incorporate yourself, it will require a great deal of research yourself. You will have to review the Ontario Business Corpo...

Who can guide you through the incorporation process?

Owners who are unclear about the process of incorporation may want to hire an attorney. Peter Home, with the firm Geoff McDonald & Associates, says, "An attorney can guide you through the process as well as teach you the ins and outs of how your company will need to operate once incorporated."

What are the benefits of a corporation?

There are multiple benefits to organizing your company as a corporation: A corporation limits your personal liability and may make tax breaks available to you. Your corporation can take tax deductions for the cost of health insurance and life insurance.

What is a legal consultation?

A legal consultation can help an owner determine which corporate entity will be most advantageous and how to get the most out of incorporating the business. Attorneys can also highlight the downfalls of different entities in terms of liability and tax, as well as show you how each different option will have varying effects on the business.

How to organize a corporation?

There are multiple benefits to organizing your company as a corporation: 1 A corporation limits your personal liability and may make tax breaks available to you. 2 Your corporation can take tax deductions for the cost of health insurance and life insurance. 3 Incorporating also means people will take your company seriously and you can set the stage for future expansion of your business. 4 You can raise capital for the business through the sale of stock. 5 Ownership in a corporation can be transferred easily should you decide to sell.

Is it worth it to have an attorney for incorporation?

Dolman offers some perspective for those contemplating DIY incorporation versus using an attorney. "Ultimately, if you have the money to spare, it's well worth it to have an attorney guide you through the process of incorporating. You'll not only save time but also stress, as you'll have a live expert available to both answer your questions and advise you on how to proceed. However, if money is tight, the process is absolutely something you can do yourself."

Is it easy to incorporate a business online?

In addition, in most states, the process is easy, available online, and doesn' t necessarily require guidance from an attorney. "For a solo owner, when you are just starting and are too small for a major lawsuit risk, there is nothing wrong with saving a little money by doing a DIY incorporation," says Ryan Reiffert, a Texas-based attorney.

Is it cheaper to incorporate on your own?

It is definitely tempting to incorporate on your own because it's less expensive than hiring an attorney. "While state fees generally total between $100 and $250, the average attorney charges that by the hour," says Matthew A. Dolman, a Florida-based attorney with Sibley Dolman Gipe Accident Injury Lawyers, PA.

What is incorporation of a business?

Incorporating a business is not about filing a piece of paper with the Secretary of State (which is what the incorporation services do), it is about making the correct initial decisions. These decisions have substantial ramifications and potentially large costs.

What happens if you choose the wrong entity?

If the initial organization is not done correctly and completely, if you choose the wrong form of entity, or if you choose the wrong state, trust me the legal and accounting costs to unravel or correct the errors will be substantial. The tax costs can be very, very significant.

Can creditors get to your personal assets?

This is a big, big issue. The primary purpose of using a corporation is to get “limited liability” which means creditors can only get to the assets in the corporation and cannot get to your personal assets like your house or brokerage account. However, most do it yourself incorporators do not complete the initial documentation properly (shareholders meeting, election of officers, shareholders agreement). Guess what, chances are their corporation will not withstand scrutiny and you don’t have limited liability which means they can take your house.

Who wrote the book "Incorporate Your Business"?

Whether or not you decide to get a lawyer, check out Incorporate Your Business: A Legal Guide to Forming a Corporation in Your State, or How to Form Your Own California Corporation, both by Anthony Mancuso (Nolo). These books provide information about incorporating, even if you decide not to do it yourself.

Who wrote the legal guide for starting a small business?

Excerpted from Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo).

Is it worth it to start a corporation by yourself?

Still, dollars are often precio us to people just starting out in business, and you may decide that it's worthwhile to attempt to form your corporation by yourself. If you choose that route, it's a good idea to have a lawyer experienced with small businesses look over the final documents before you file them. You should be able to find a lawyer willing to do this at a fraction of the cost of having the lawyer handle the matter from beginning to end.

Do small businesses have to be closely held?

Although most small businesses are considered to be closely held corporations and exempt from these potentially complicated regulations, it's worth spending a few bucks to find out for sure.

The Benefits of Incorporating Your Business

There are a number of benefits to incorporating your business, such as:

How to Incorporate Your Business

Incorporating your business can be done without help if you know which documents to fill out and file with local state authorities. A popular alternative, however, is to work with an attorney who has knowledge and experience in this area.

Costs Associated With Incorporating

If you choose to file your incorporation documents without a lawyer's assistance, you'll normally only have to worry about paying state filing fees. These can range somewhere from $100 to $250 on average, depending on your specific state.

How to incorporate a business?

In order to incorporate as a small business, the business must first file the required paperwork with the Secretary of State’s office in the state in which they intend to incorporate. Although forming a small business corporation is not often complicated, maintaining the business as a corporation is often not as simple.

Why do you need an S corporation?

S Corporation: An S corporation is a closely held corporation that is formed in order to allow the business owners’ income to be passed through the shareholders rather than taxed through the corporation. Setting up an S corporation is worth considering for tax avoidance purposes; and

What are the advantages of a small business?

Other advantages to incorporating a small business include: 1 The ability to raise capital from investors through the sale of business equity or stocks; 2 The ability to transfer ownership; 3 The availability for tax deductions or tax breaks, dependent upon the type of incorporation formed; and 4 The ability for the corporation to remain after the original business owner or investor passes away or moves on. Importantly, there is no limit to the life of a corporation.

What is a non profit corporation?

Non-profit Corporation: Unlike a for-profit corporation, non-profit corporations are formed to carry out an education, religious, charitable, literary, or scientific purpose. Because the corporation is nonprofit, they are typically granted special tax treatment;

What is a business corporation?

Business Corporation: A business corporation is simply a corporation that is formed in order to engage in commercial activity for a profit. Business corporations are also commonly referred to as a “for-profit” corporation;

What is a professional corporation?

Professional Corporation: Professional corporations (“PC”), also known as professional service corporations (“PSC”), are corporations that provide services that require a professional license. Professional corporations are often formed by lawyers, engineers, physicians, public accountants, or architects.

Where to file articles of incorporation?

After deciding on a name, the next step is to draft the articles of incorporation for the corporation, pay the required fees, and file the articles of incorporation with the Secretary of State’s office. The articles of corporation contain numerous different aspects of running a business, such as what type of formation you are seeking to form, the purpose of the corporation, the identities of those forming the corporation, where the principal office is located, etc;

Why should a small business be incorporated?

Five Reasons Why a Small Business Should Incorporate. Many small business owners launch their companies as sole proprietorships in which they and their businesses are essentially one and the same. However, changing the format of a small business to a corporation or a Limited Liability Company (LLC) can offer a range of advantages for entrepreneurs. ...

What are the advantages of incorporating a small business?

The advantages of incorporating a small business include: No. 1: Personal asset protection. Both corporations and LLCs allow owners to separate and protect their personal assets. In a properly structured and managed corporation or LLC, owners should have limited liability for business debts and obligations.

Why are corporations and LLCs important?

Corporations and LLCs are both separate legal entities (business structures) that enjoy certain protections under the law and important benefits. Most people form a legal business structure to safeguard their personal assets. 2.

Why put LLC after business name?

No. 2: Additional credibility and name protection. Adding "Inc." or "LLC" after your business name can add instant legitimacy and authority. Consumers, vendors, and partners frequently prefer to do business with an incorporated company. In most states, other businesses may not form an entity or use a trade name that is the same as your corporate name. This benefits the business legally and helps in brand-building and marketing.

Can a corporation continue to exist?

No. 3: Perpetual existence. Corporations and LLCs can continue to exist even if ownership or management changes. Sole proprietorships and partnerships just end if an owner dies or leaves the business.

Can a corporation avoid double taxation?

However, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status. No. 5: Deductible expenses.

Is a small business a corporation or LLC?

However, changing the format of a small business to a corporation or a Limited Liability Company (LLC) can offer a range of advantages for entrepreneurs. Most notable is that a corporation or LLC protects entrepreneurs' personal assets in case debts or legal judgments are claimed against the business. The advantages of incorporating ...