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When starting a business, it is important to research the different types of business entities to determine which one is best suited for your business. The most popular business entity is a corporation. Incorporating your business will make the business a legally separate entity from the owner. A corporation can do anything that a legal person can do, such as owning property and signing contracts. It is essential to understand the advantages and disadvantages of incorporating in order to decide what is best for your company.

The Advantages and Disadvantages of Incorporation

Incorporating a business is a popular choice because a corporation limits personal liability in business transactions. Incorporating a business will protect the business owner’s personal assets when someone else in the corporation makes a mistake. A corporation is able to sell shares of its stock. This makes the transfer of ownership much easier because owning a stock is equivalent to owning a share in the ownership of the business. Incorporating a business is a good choice if the business owner plans to sell the business in the future or seek investors. A corporation will also have perpetual survivorship, meaning that it will continue to exist even after the death of the founders.

Though there are benefits to incorporating, there are disadvantages as well. Incorporating a business may be a long and extensive process that requires a large amount of money. Furthermore, there are certain accounting and recordkeeping procedures that a corporation must comply which that may be costly. Small businesses and partnerships may not have enough resources to comply with the incorporation procedures and eventually the obligations may outweigh the advantages of incorporating. Furthermore, depending on the financial situation of the company, the taxes may increase after incorporation.

The Process of Incorporating a Business

If you decide to incorporate your business, you must research and comply with state laws. Some states favor corporations more than others. The laws governing corporations may vary between states, but there is a set of general rules to remember.

Every corporation must write a document called the article of incorporation that sets the primary rules that govern the management of a corporation. Some businesses may decide to incorporate out of state and obtain a license to practice elsewhere in order to have more freedom while doing business. The article of incorporation should also define the number of stocks the company is allowed to issue. The document must also list the names of the corporation’s decision-makers. The two types of decision makers in a corporation are incorporators and directors. Incorporators are the people responsible for preparing, signing, and filing the articles of incorporation. After the articles of incorporation are filed, the incorporator’s duties end and a board of directors will be chosen. The board of directors is usually made up of the business owners who are responsible for making the corporate goals and policies of the business.

As a corporation, the name of the business must be unique and differ from any other business registered to the state. The state of California offers a business name availability search to easily search for similar business names and avoid complications. The business name may not contain any obscene words or words that could be misleading to customer. For example, a business name cannot contain the word “bank” unless it is a financial institution. The business name must also end either with “Incorporated”, “Company”, “Corporation”, or an abbreviation of one of the three.

There are many benefits of incorporating a business such as the ability to sell shares of stock. However, incorporating a business may be detrimental if the business is small does not have the funds to comply with incorporation procedures. Ultimately, it is up to the business owner to decide whether or not it will be beneficial to incorporate their business.

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Starting a new business can be a bit scary. Aside from worries of failure, there’s also the hassle of making sure all legal paperwork are properly filed. I reached out to Mr. Wang (Tommy) because of his excellent reviews and reputation and I am so glad I did. He was thorough and meticulous in answering all of my concerns and took time to find out special laws and policies regarding the kind of business I am starting. I could focus on the daily practical side of starting my new office without worry because I felt Tommy was reliable and took my case seriously. My business is opened and it’s all been a smooth start because of Tommy’s help. I have plans to start another business venture in the next few years and I already know I’ll be coming back to Wang IP Law.

The Shindig W.

I came to Tommy for help reviewing a licensing agreement I had secured with a well-known manufacturer. Tommy made sure I understood all the details in the contract and he negotiated with the company to improve my side of the deal. I mentioned to Tommy at my first consultation that we were looking to expand throughout the US and were investing a lot of money to make a big entrance into the market. I did not think I would have my store open so soon but Tommy also has connections with the local area and realtors to help me secure the location for my first store in the Los Angeles area. Tommy works a lot with the local businesses and he understands how to transition from the Asian market to US market. Within 8 months my store was open for business and fully operating. I must recommend Tommy to any business owners looking for help with contracts and improving their side of the deal. Tommy has the knowledge and experience to make sure there is a smooth process to open for business here, and make sure that your company is set up for success.


I think Tommy and his team by far considered the best people to work with in my 16 business years. Beside quick responses to all my inquiries, they also done things right and providing very professional solutions. I’m highly recommending Tommy and his firm to all business owners.

Calvin C.

I have been working on my Utility Patent for almost 4 years. I have hired and fired two very reputable IP firms because with all their expertise and reputation for being some of the top firms in IP Law, I felt a lack of connection and care in my product, time and financial investment. Then I found Tommy and his team. Tommy does not waste time. He and his team are professional and extremely thorough. After 4 years, I finally found a legal team that I felt spent the time to really understand the components of my utility patent. Tommy also very mindful of cost and how and where my money would be better spent. I really feel I am in great hands with Tommy and his team. They have been patient with my revisions. And most importantly, they made me feel that they fully understood the importance this patent is to me. It has been a great and comforting pleasure working with Tommy.


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