Incorporate Your Business There are many reasons why most businesses--even one-man-shops--should incorporate. Among the best reasons are: Limited legal liability of the business owners. Longevity of the business entity (the business is not dissolved with the death of its owner(s)). Income tax savings. In most states (including Georgia), it only takes one person to form and operate a corporation. Legally, except for special entities (not-for-profit and professional associations), all corporations are basically the same. A corporation pays both federal and state income taxes on its profits. When these profits are distributed to its shareholders, they claim them as dividend income on their personal income tax returns. Due to this double taxation, most businesses, especially in their initial years, benefit by electing to be taxed as an S Corporation. A corporation, with the consent of its shareholders and meeting certain criteria, may elect to be taxed as an S Corporation (Small Business Corporation). An S Corporation pays no income taxes as its profits and losses flow to the shareholders to be claimed on their personal income tax returns. When setting up a corporation, it is necessary to determine if the corporation can meet the criteria and qualify as an S Corporation. If it does not qualify, and the shareholders want to avoid double taxation while having limited legal liability, in many states (including Georgia), the business can be established as a Limited Liability Company (LLC). An LLC is afforded the same legal protection as a corporation, does not pay federal income taxes, and the profits are taxed basically in the same manner as an S Corporation or Partnership.

If you have a question, or want more information, please call:

(706) 724-7979 or E-mail us today!