Incorporation of a business means making it into a separate and new body which will be identified as an individual unit detaching it from the proprietor of the firm. This means that the company will enjoy the benefits on individuality and it can do or perform its operation more efficiently without any hassles. Incorporation literally means that the individual who once had power to govern the company, his powers now stand limited due to incorporation. Imagine a scenario if a company becomes bankrupt before incorporation. Who will be held liable for this? It is the owners of the company because they have the full control of the company and they are liable to this. But if the company is made into a corporation, then these CEO and managers will not be held responsible as they are no more than an employee of that particular company, not the owners.
The main advantage of making a company incorporated is that, there will be less of disagreements and also the business will go uninterrupted because, in case if the company is not a corporation and there is a dispute for ownership or the owner passes away, the whole company work comes to a standstill until measures are taken to solve this problem. The tax benefits are a great issue to be discussed. If the company is not incorporated then individual tax pertains to the owner and the company, which, in the end may reduce the profit margins of the company. But if the company becomes a corporation then these ownership taxes may not be levied as every individual, ranging from an office boy to the manager or CEO will be treated as the employees of the company. Another advantage of a company being incorporated is that all the aids- medical, general and life insurance are direct from the company.
