incorporate

Do I Need To Incorporate?

One of the frequent questions we get is whether or not a business needs to
be incorporated. Our answer is usually yes. Here are some benefits of
and facts about incorporating:

Limited Liability

If a business is not incorporated, the owners can usually be held
personally liable. This means that if a plaintiff sues the business and wins,
the owners may have to pay the judgment. The plaintiff can potentially
take the owner's personal assets and put a lien on the owner's house
(Texas allows for certain exemptions for individuals).

If a business is incorporated, in most instances the plaintiff can only look
to the corporation's assets to satisfy a judgment. Given that many small
corporations do not have many assets, judgments are often uncollectible.

There are many ways a business can be liable. A few are: injuries to
workers, injuries to non-workers, products liability, breach of contract,
employee wrongful termination or treatment, and suits by customers or
competitors.

What does it cost?

For a simple corporation, Hengst & Henderson charges a flat fee of
$1,000. This includes the filing fee with the Secretary of State, the
corporate book and the following legal documents: articles of
incorporation, bylaws and minutes of the organizational meeting. Once
you are a client of Hengst & Henderson, we encourage you to call us with
minor questions at no cost. If we do anything else for the corporation that
requires a fee, we will tell you in advance.

What Type of Entity if for me?

There are many forms of entities that have limited liability, including
corporations, limited liability companies, limited partnerships,
professional associations and more. For a more detailed explanation of
the different entities, see our article on Types of Entities.

How long does it take?

Hengst & Henderson can usually incorporate a business the day the
owners meet with us. At the meeting, you give us a proposed name for the
business and we check the availability of the name with the Secretary of
State. If it is available, we fax the articles of incorporation to the
Secretary of State. Usually within three working days, the Secretary of
State will give the new corporation a charter number and then within 7
working days, will send the stamped original articles of incorporation to
us. Once the originals are received, the new corporation can open a bank
account.

What now after incorporating?

Once you are incorporated, we urge you to seek a certified public
accountant to ensure your proper tax status and filing requirements are
met. One big question a small corporation should have for the CPA is
whether to elect "S" status with the Internal Revenue Service. This
election must be done within two and one-half months of the
incorporation or the fiscal year. Hengst & Henderson are not CPA's and
will not advise corporations on tax status.

For more information, please contact us.

Not Certified by the Texas Board of Legal Specialization