The Decision to Incorporate and Its Advantages and Disadvantages

| In a sole proprietorship, the business and single owner are one in the same. A single owner makes all decisions with regard to the business and the single owner retains all profits earned by the business. The single owner is also responsible/liable for all debts and obligations of the business on a personal level.

According to Model Business Corporation Act, one or more persons can act the incorporator or incorporators of a corporation by delivering articles of incorporation to the secretary of state for purposes of filing. Articles of incorporation must bear the name of the corporation that satisfies section 4.01 of the model act. It has to reflect the number of shares the corporation is authorized by law to issue and the corporation's street address. The names and addresses of each of the incorporator must also be reflected in the articles of incorporation (American Bar Association, 2008).

General Partnerships are not without their disadvantages. Without being an incorporated company the owners are still subject to issues such as liability, control, and location issues.

1. The concept of selective incorporation according to We the People, was a “progression by which different securities in the Bill of Rights were incorporated into the Fourteenth Amendment. In 1937 the “courts were still unwilling to defend civil freedoms beyond the First Amendment. The first case that established selective incorporation was Palko v. Connecticut. The courts determined that “the provisions of the Bill of Rights should be selectively combined and useful as a constraint on the states by the Fourteenth Amendment “(Ginsberg et al. 117). Gideon v. Wainwright “established the right to counsel during criminal courts”. The Miranda v. Arizona likewise established the right to counsel and remain silent” The incorporation that gained a lot of nationwide attention is McDonald v. Chicago where the “right to bear arms was granted” (Ginsberg et al. 118). This incorporation has paved the way for several national cities to pass gun laws.

Convenience/Burden: Limited Partnerships have extra requirements placed upon them to comply with state regulatory requirements. They must maintain a registered agent to represent them in the state in which they were formed. They are also required to file an informational report with the IRS of the profits passed to the general partners.

* Limited Liability - Unlike partnerships and sole proprietorships, corporate shareholders are not liable for any of the corporation's debts.

“...No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection on the laws (US Const. amend. XIV, sec. 1)”. Selective incorporation is a constitutional doctrine that guarantees that states cannot enforce laws that deprive American citizens of their constitutional rights given in the Bill of Rights. The Fourteenth Amendment passed in 1868, still upholds a controversial role. Although the initial intention of the Fourteenth Amendment was to implement equality for newly freed slaves, its power expanded to justifying the application of federal rights granted by the Bill of Rights to state governments. On a case by case basis, the Supreme Court decides on which aspects of the Bill of Rights it will apply to the states. The idea of selective incorporation has influenced American federalism tremendously due to multiple variances in opposing and supporting outlooks. Numerous cases of violated rights will be the topic of discussion, and how selective incorporation has brought justice among them all. Demonstrated in this paper will be how Selective Incorporation has made a significant difference in America, and reflect on how it came about.

An incorporated business is a separate entity from its owner or shareholders. This means you'll need separate bank accounts and credit cards for your business. You may need to provide business identification -- rather than just personal identification -- when withdrawing money from the bank. You'll also sign business contracts as a representative of your business rather than as yourself. Some new business owners are accustomed to signing business contracts and documents as themselves, but if you continue to do this after you incorporate, these documents might not be legally binding or could leave all parties unclear about who is responsible for the document -- you or your business.

Due to limited liability, company creditors’ interests are not protected . Creditors need to bear the risks inherent when dealing with limited company. Shareholders are discouraged from monitoring and controlling the business due to the benefits of limited liability.

Some of the drawbacks for a business set-up under an incorporation is the additional requirements for administrative details and record keeping. In some cases, becoming incorporated can create an additional tax burden for the business. This can be especially detrimental to the owner of the business during the developmental

Second, the seven new corporations would be highly independent, and therefore a major rearrangement of the capital structure would be vital. It is likely

As with any kind of business formation, there will always be, to some extent, negative aspects associated with the creation. To this date there is no perfect form of business entity. When deciding on which entity is best suited for a business, there are many things to be considered. Prior to deciding on a business structure, some major points to be thought about are both the legal and tax ramifications associated with the entity chosen. Another criteria that should be considered are the costs connected with the entity type. These cost include the cost of formation as well as any continuing administrative cost that may be incurred. (“Choose Your Business,” 2011)

A  limited  company  has  named  directors   whose  financial  liability  is  either  limited  by  guarantee  or  by  shares.  Setting  up  this  kind  of  organisation   involves  to  comply  additional  costs  and  time  in  order  to  comply  to  the  company  law.     ! Charitable  Status     Organisations  with  charitable  purposes  can  apply  for  charitable  status.  Benefits  include  tax  advantages   and  the  ability  to  receive  donations  from  charitable  trusts.

As a corporation, the McGees may be able to find new sources of funds for business development. Many people, including shareholders, could invest in the corporation. Finally, the corporation is the most reliable and trusted form of business entity. A possible downside to incorporation, the McGees may have to put up some of their private assets as a guarantee for the repayment of funds to financial institutions, if they are not found eligible for payment of money. Incorporation is not a small ordeal; it involves many legal formalities, laws, agreement documents, etc. It is necessary to prepare and revue all these documents carefully. Additionally, setting up the corporation will be an expensive task. There are good and bad aspects to a corporation in reference to taxes. With a corporation, the McGees will be taxable for self income, as well as for the corporation's revenue. However they will enjoy personal tax credits as with the sole proprietorship.

Therefore, these concerns can only be handled after the company decides on the offering structure, which defines investor’s demographic and a precise stock exchange to list on. Afterward, the company and its underwriters must begin to prepare the required documentation for both potential investors and regulators. The main documents are registration statements and a prospectus which contains all the financial and non-financial information that potential investors require in order to make the investment decision. In most countries, the contents of the prospectus must be approved by the local securities regulators before it can be distributed to potential buyers. (Bodie et al. 2005,