Kisner Law Firm, LLC
Attorneys You
Want to Know

What is incorporation?

If you are starting a business or involved in business ownership in Pennsylvania, you may be curious about incorporation. Entrepreneur explains incorporation is the process of creating a corporation, which is a standalone entity with its own legal rights. Incorporation is done at the state level, but you can incorporate in different states, usually through filing forms and paying a fee.

Creating a corporation requires a board of directors who are responsible for running the business. You also will issue stock to investors. One perk here is the obvious financing that can come from having investors. Another benefit is the limited liability faced by company shareholders. Because the business is an independent entity, it is liable in the case of a lawsuit or other issues.

Incorporating a business requires following specific rules. You must file an articles of incorporation with your state. You must file taxes on behalf of the business and keep the finances of the business separate from personal finances. You must also pay dividends to shareholders and register with the Securities and Exchange Commission if you distribute over a certain number of shares in your company.

The biggest disadvantage for incorporating is double taxation. Because you have to pay yourself a salary from the business, you will have to pay employment taxes and the company has to pay its own taxes. In a large company, this may not be an issue, but smaller companies may find this gets expensive and forming a corporation becomes less advantageous. This information is only intended to educate and should not be interpreted as legal advice.

No Comments

Leave a comment
Comment Information

Office Location

Kisner Law Firm, LLC
Gulf Tower
707 Grant St., Suite 2646
Pittsburgh, PA 15219
Map and Directions

Phone: 412-208-4263
Fax: 412-235-6704

Back to top