The Decision to Incorporate and Its Advantages and Disadvantages

2245 Words Jan 15th, 2018 9 Pages
This new healthcare facility will incorporate in order to save itself from personal liabilities. Generally, businesses are often incorporated as limited liability companies (LLC) or S and C corporations. There are a number of merits and demerits attached with these different types of structures. Let's put light on some of the merits and demerits (Cutler, 2000): Separate liability: A separate liability company is treated as a separate entity, under which shareholders and owners are not held personally reliable for the debts of the company (Cutler, 2000). Investors: If the investors consider selling of shares the only means to raise capital, then their first step should be incorporation. Furthermore, if the investors want the business to go public then again incorporation is required (Cutler, 2000). Taxes: According to the corporate structure selected, double taxation can be avoided and even election to go through a few taxes can be made (Cutler, 2000). Never-ending business: Even if owner leaves, dies, or sells the company, the company remains unaffected. This is also known as perpetual existence (Cutler, 2000). Credibility: Incorporation or a limited liability company is considered as more reliable and thus attracts greater number of customers, partners etc. The name of the business is also kept protected if it is incorporated. Mentioned below are a few demerits of incorporation…
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