Benefits of forming a corporation is protections from personal liability and asset seizure that are offered to the owners/shareholders of a corporation. The protections limit the legal and business liabilities because it is treated as a separate, legal entity.

There are many favorable taxation benefits such as, deductible employee benefits, personal asset protection, anonymity, ability to raise capital, and credibility over a personal entity. Other benefits include flexibility beyond that of a sole proprietorship --the corporation can have it's own bank accounts, property and even establish a line of credit, irrespective of the individual accounts or credit of the shareholders. It can sue and be sued, hire staff, and engage in business dealings and maintain separation for itself and its stockholders.

To Reduce Personal Liability

The corporation is recognized as a separate entity and is treated as separate from the owners (shareholders). If the corporation is sued, the suit is an entirely different en entity then it's stockholders, therefore if someone is successful in suing the corporation, the suit can not effect the person shareholders of the corporation, unless improper records and reporting is not observed.

Corporations and Tax Advantages
There are tax advantages for the corporations that are not available to sole proprietorships that include the ability to claim medical benefits for its employees and other business and entertainment expenses as well as tax-favorable pension plans. The S-Corporation allows for "pass through" taxation benefits to the stockholders that will avoid double-taxation. Please refer to your CPA or Accountant for these tax benefits. One additional benefit of the Corporation is the protection from audits. The sole proprietorships, or individuals filing self-employed Schedule "C" tax returns, are more likely to be audited by the IRS. The audit rate for corporations is considerably lower than the self-employed.

Deductible Employee Benefits of a Corporation
Another great benefit you can enjoy when you Form a Corporation is the wide array of tax deductions and tax-deductible benefits one can provide to oneself and to the other employees of the corporation. Even a one-person Corporation can enjoy tremendous tax-deductible benefits such as health insurance deductions, travel deductions, automobile deductions, client entertainment deductions, recreational facilities, etc. One of the most beneficial deductions is the pension plan or 401K. Money placed in a properly structured pension plan is tax deductible and the funds grow tax-free for retirement. These benefits alone can justify the existence of the corporation, based on costs alone, many times over.

Form a Corporation for Asset Protection
When a civil lawsuit is filed, it generally comes from one of two directions: Business and personal. If your company is incorporated and is sued by another company for business reasons, and loses said lawsuit, the shareholders will not be required to satisfy the debts of the corporation from their own personal assets. This safeguards assets and properties of the individual shareholders, and as such, is more attractive to potential investors. This is the "limited liability" feature of a corporation. If faced with a personal lawsuit, such as a divorce or an automobile accident, for example, the assets held by the corporation are safeguarded from any ensuing lawsuit or settlements against the individual shareholder--another reason why a properly formed corporation is attractive to potential investors.

Can I Form a Corporation Without an Attorney?
Yes, you can incorporate your business without an attorney. However, it is critical that certain, specific wording is included in the articles of incorporation, by-laws, minutes for meetings and other documents so that the corporation can provide legal protection, tax savings and other important corporate benefits. Professionally prepared articles of incorporation, by-laws and minutes are provided in the Companies Incorporated complete package.