Deciding whether or not to incorporate is an important choice to make when starting your new business. Other types of business legal structures include sole proprietorships (which are very limited in scope), partnerships (which don't provide the same protections from personal liability), and limited liability companies (commonly called LLCs). As with any legal structure, corporations have certain advantages and disadvantages. Whether you decide to incorporate should be based on these factors and a careful analysis of the nature and needs of your business. PROS Owner Protection from Legal Liability:Once a new business's owner(s) successfully completes the incorporation process, the owner(s) have a limited amount of legal liability for the corporation's business activities and debts, because in the eyes of the law the corporation is a separate entity. In order to maintain this limited liability, the corporation's owners must follow a number of legally required corporate formalities. Ability to Attract Investors:The corporation's ability to issue stock is a strong selling point to those willing to invest capital in a business venture. Power Structure:The corporate business form has an established power and management structure: directors, officers, and shareholders. Each group has its own set of clearly-defined roles and responsibilities within the corporate framework. Stock and Stock Options for Employees:Especially for larger businesses, the corporate business structure offers an appealing opportunity to potential employees -- stock benefits and stock options (the employee's right to buy stock at a locked-in price). CONS Time and Cost of Incorporation:The incorporation process can be expensive and time-consuming. A number of documents must be prepared (including the new corporation's articles of incorporation and bylaws), and filing fees must be paid to your state's Secretary of State office (or similar business filing agency). Following Corporate Formalities:All corporations are required by law to observe a number of corporate formalities to ensure that the corporation is operating as a separate entity, independent of the business's owners. These steps include holding regular meetings of directors, keeping records of corporate activity, and maintaining the corporation's ongoing financial independence. Potential Tax Liability:The profits from traditional corporations may be "double taxed." That is, the corporation itself is taxed for any profits earned, and any individual stockholder who earned profits from the corporation (in the form of paid "dividends") are also taxed. This occurs most often in larger corporations, and may not be an issue for stockholders and owners of smaller corporations, who often work for the business itself and are paid salaries (which are tax-deductible for the corporation) rather than dividends. One solution to the double-taxation problem is electing "S" corporation tax status.
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AuthorYoel “Mo” Molina, I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters.. Archives
February 2021
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"Mr. Molina has always been there for us with timely, reliable and competent advice. He is an important and valuable part of our team." Corporate Client Eric Delgado, President of American International Export, Inc., a worldwide importer and exporter of brand name appliance parts. |
"Yoel has been responsive and attentive to our company’s best interests and needs. He has been a valuable resource to our company. Any company that enlists his services would be in good hands-- including our own clients.” Corporate Client Gibran Flynn - Co-Owner and Founder of Eleva Solutions, Inc., the South Florida leader of outsourced HR, Staffing, Training, and Loss Prevention. |
"My name is Anastasia Yecke Gude and I am the owner of Healing Hands Therapeutic Massage LLC. In the process of my company’s growth and expansion, I suddenly found myself a few weeks ago in need of a 1099 contractor agreement, and I needed it ASAP. As in, the very next day! I contacted the Law Office of Yoel Molina and his assistant put me in touch with Mo. I sent him what I had drafted up and he replied within a few hours with suggested revisions and clarifications, as well as a few insights I had not even considered. I was thoroughly impressed by the quality of work he provided, especially considering the time crunch I put him in (sorry, Mo!). I definitely recommend his services to anyone in need of a good contract attorney, and I will be calling him again for future work…hopefully in less of a rush next time!"
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