Incorporations Maine

Liability and taxes are big factors in deciding whether to incorporate or not. Other important facets are how will the Maine business be funded and are there plans to take the company public.

A corporation is a legal entity with legal standing similar to an individual person. For this reason, a corporation’s actions are considered as made by the corporation, not by an individual person. This simple legal distinction is what keeps the liability with the corporation and not with the actual individual who is acting for the corporation. This liability protection is one of the biggest reasons that corporations are formed.

Taxes are another big consideration that a business would rather operate as a corporation than as an individually owned business. A privately owned business that is operating as an individual or partnership is considered the same, as if the individual were doing the business of the company. This presents direct tax requirements and obligation. The same actions done by a corporation are taxed through the corporation and are not directly the actions of the individual in Maine who owns the corporation. This is true in a typical corporation, but there are exceptions to this basic rule, like an LLC or the like.

Another reason that a corporation may be formed is if the owner wishes to take advantage of the retirement benefits that a corporation can offer its employees and uses of boats and cars. A person in a high tax bracket can benefit in some corporate environments better than they could as an individual owner.

Any individual or individuals in Maine can form a corporation. A corporation can form another corporation. How this is done as far as registration with the state or country can be completed by various means. An individual can do this by himself or herself if they know how. A law firm that specializes in filing the documents can do this. There are also Internet firms that will do this for the individual, but it is much the same as if the individual did it for himself.

The result is the same, if the papers are properly completed and filed. When the fees are paid, the corporation is now a breathing live entity. The problem with an individual doing this filing without any advice is the language and information in the filing may not be correct and leave open unintended consequences. The more complicated the filing, the more reason to act on sound advice from an expert in such filings.

The savings of attorney fees by doing this yourself may be a foolish savings, if it is done improperly and leaves open areas of liability.

Incorporate a business is the legal act of filing the necessary papers, so the business can operate as a corporation and not as a private person. This legal entity is then responsible for all actions done in the corporate name. The new entity is required to file state and federal taxes and acquire any licenses to do business in the name of the corporation. The new corporation can purchase insurance, own real estate, and cars, as if were a live person and not just a paper person. The corporation enjoys all the advantages and disadvantages of a blood and tissue person. As far as the law is concerned, this new legal entity is a person, and therefore all the laws and rules that govern people apply to it in very similar ways.

It also means that it is responsible for actions good and bad done in its name. Contracts can be signed and enforced between the corporation and the contracted party. Leases and ownership can be done in legally binding ways. The point is that when a Maine business incorporates, it becomes a separate entity from the people who own the stock of the corporation. This results in liability protection for the corporate owners. It also allows the business to do actions in its own name and not in the name of the owners.

Reed Law Group

(734) 761-5860
115 1/2 E. Liberty
Ann Arbor, MI
http://www.reedlawgrouppc.com