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Incorporation An Effective Idea

Elaine and Roy are registered nurses. They want to start a home health agency, taking referrals from physicians and providing health care to homebound patients. They plan to be in business for 10 years.

Identify the reasons why incorporation is an effective idea for their business, the steps they must take to incorporate their business, and the steps they must take to dissolve the corporation once the 10 years has passed.

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Incorporation is a good idea for Elaine and Roy's business because incorporating protects personal assets - it safeguards their personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation.

Other legal benefits of ...

Solution Summary

Incorporation is a good idea for Elaine and Roy's business because incorporating protects personal assets- it safeguards their personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation... This solution is 382 words.

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