The Smotherman Law Firm  214-287-3904
Return to Home Page
Small Business IncorporationBusiness Group

     In the eyes of the law a corporation is viewed as a legal entity, separate and apart from the owners of that corporation. There are many reasons why incorporation may be a beneficial form of business organization. It can be a very effective way of setting out various ownership interests in the company through the distribution of stock. It is also a good means of ensuring continuity of the business entity itself. With a partnership, changes in partners means an effective end to the business entity that was the partnership. With a corporation, ownership can be transferred without disrupting the legal continuity of the corporation. Another very important feature of corporations, is their ability to shield their owners from liability. To form a corporation, Articles Of Incorporation must be filed and approved by the state, and Bylaws must be drafted which set out the duties of the officers of the corporation and many of its guiding operational rules.

     There are, however, also some drawbacks to the corporate form of organization. In certain circumstances, the corporation's revenues are subject to dual taxation- that is profits to the corporation are taxed, and when profits are distributed to the stockholders, those distributions are taxed again, as income to the stockholders. Additionally, corporate formalities must be observed and maintained. Regular directors meetings are required to conduct ongoing oversight of the corporation's operations. But in the right circumstances, a corporate structure can be a very beneficial way of structuring a business.