Benefits of Incorporation | S-Corporation | C-Corporation | Limited Liability Corporation

Choosing to incorporate is one of the most important business decisions you will make. Incorporating can provide you with benefits including protection of your personal assets. 

Incorporated Businesses are considered a Separate Person | Liability Protection

When you incorporate, i.e. S-Corporation, C-Corporation or LLC (referred to as “entity” in this article); you create a separate artificial person that is separate from you. This separate entity exists independent from the shareholders, owners and employees. The entity will continue to exist regardless of the owner, shareholder and employees until the boards of directors decide to dissolve the corporation.

This is quite different from a sole proprietorship or general partnership, which are considered one with the owners. A business structured like this can greatly affect you as the owner when it comes to business liabilities. In this structure you are personally responsible for all that happens in the business. If something goes wrong, your personal assets that you worked so hard for are at risk.

If you or your partners are involved in a bankruptcy, it will have an impact on your business. Your business assets are at risk if you or your partner(s) are involved in a bankruptcy or any legal proceeding.

By incorporating, the assets of the business are separated from your own or your partners. Death and disablement of partners do not affect the business. 

Liquidity | Freely Transferability of Assets

There is flexibility when you incorporate your business. Business owners who incorporate can at a future time leave the business when they so desire. Since, a business is considered a separate legal person apart from the shareholders and owners; it can be sold or transferred with relative ease. Incorporation allows interest in the business or company to be transferred from one person to another freely.

On the contrary, if you are in a partnership, the partnership automatically dissolves when a partner decides to leave regardless of the desires of the other partners. Even if a partner is a 5% holder of the business, if they want to leave the partnership, the partnership automatically dissolves. This can be a huge risk and subject partners to all kinds of liability. This is not the case if you are incorporated. A minority shareholder is not able to force dissolution of a corporation without cause. 

Limited Liability in Corporations 

This has to be one of the greatest benefits of having a corporation. As a shareholder, you have limited liability. Any debt of the corporation does not open doors to shareholders personal assets. Since a corporation is a separate entity, as long as you follow certain basic rules of separation, your personal assets do not get lumped in along with corporate assets. For instance, if a business is unable to pay its debt (and you didn’t personally guarantee the debt), there is no personal liability. Usually, an investor’s liability is limited to the investment. 

Business Law

Drason Law Firm can help you in your Business Needs. We help our clients in the following: 


Contact us if you have any questions. Our experience spans from helping companies get off the ground to defending seasoned companies in suits. 

    ConTACT US
Drason Law Firm is proud to serve Start-Ups & Small Business in California. 
We handle Business Disputes, Breach of Contract, Contract Disputes, Disagreements, and Conflicts and assist our clients in all business related matters. We are located in San Jose. I guess you could call us San Jose Business Attorneys or Business Law Attorneys. 

We work with clients, and seek to work with clients, in all of Northern California, including the following cities and counties: Alameda, Albany, American Canyon, Atherton, Belmont, Belvedere, Benicia, Berkeley, Brentwood, Brisbane, Burlingame, Calistoga, Campbell, Clayton, Cloverdale, Colma, Concord, Corte Madera, Cotati, Cupertino, Daly City, Danville, Dixon, Dublin, East Palo Alto, Emeryville, Foster City, Fremont, Gilroy, Half Moon Bay, Hayward, Healdsburg, Hercules, Hillsborough, Lafayette, Larkspur, Livermore, Los Altos, Los Altos Hills, Los Gatos, Martinez, Menlo Park, Mill Valley, Millbrae, Milpitas, Morgan Hill, Mountain View, Napa, Newark, Novato, Oakland, Oakley, Orinda, Pacifica, Palo Alto, Petaluma, Piedmont, Pleasant Hill, Pleasanton, Portola Valley, Redwood City, San Bruno, San Carlos, San Francisco, San Jose, San Leandro, San Mateo, San Pablo, San Rafael, San Ramon, Santa Clara, Santa Rosa, Saratoga, Sausalito, Sebastopol, Sonoma, South San Francisco, St. Helena, Suisun City, Sunnyvale, Union City, Vacaville, Vallejo, Walnut Creek, Windsor, Woodside, Alameda County, Contra Costa County, Marin County, Napa County, San Francisco County, San Mateo County, Santa Clara County.

Our clients often call us the “Small Business Lawyers”. We consider ourselves as the Top San Jose Business Attorneys.