Commercial Law Lawyers: Businesses And Organizations
The advantages of incorporation as a limited company
A limited company is one of the most popular forms of association due to its many advantages for an entrepreneur seeking to establish a business. In this article, we will review the main ones: separate legal personality and limited liability, taxation advantages and structural flexibility.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
Separate Legal Personality
When an entrepreneur wants to start a business and incorporate in a certain way, one of his goals will be to separate his private assets from the business assets in order to reduce personal exposure. Establishing a company allows this because it is a legal entity with a separate legal personality and therefore the liability of the shareholders is limited to the amount of their investment only. The purpose of this is so that if the company runs into financial difficulties, the entrepreneur does not bear its debts. At this time, he is therefore given the choice of whether to invest his own money to cover the company’s debts and stabilize the situation or whether to close its doors.
I would like to point out that when the principle of the separate legal entity is used in bad faith, it will be possible to lift the veil of incorporation over the shareholder under certain conditions.
I would like to point out that when the principle of the separate legal entity is used in bad faith, it will be possible to lift the veil of incorporation over the shareholder under certain conditions.
Tax Benefits
The issue of taxation is always a central aspect of every business decision, including of course the form of incorporation you will choose. Starting a company has notable advantages in this sense. With the help of an expert law firm, it is possible to carry out tax planning that will significantly reduce the amount of tax that the company must pay. For example, the tax rates paid by a company on profits that are not drawn from it are relatively low. In this situation, the entrepreneur will be able to leverage the accumulated profits for further investments. We will also note that in the case of a subsidiary, the distribution of profits between the companies is not taxable, so both the parent company and the subsidiary can use the profits to leverage other activities.
Flexibility
A limited company allows great structural flexibility for the entrepreneur, for example, the possibility of creating complex holding structures such as subsidiaries and related companies, mergers, etc. In this way, the entrepreneur can choose the appropriate business structure and thus maximize the business activity and his profits. Also, within a company, it is possible to distribute profits or raise capital by allocating shares, which also provides great business and financial flexibility and is important to the entrepreneur.
Are you interested in starting a business? It will be our pleasure to assist you with all stages of the establishment process and provide you with ongoing legal support regarding all legal aspects of your business operations.
Entrepreneurial legal advice
Are you interested in starting a company? Would you like to initiate a business or commercial activity? We invite you to a legal consultation to examine the options available to you.
Adv. Mor & Co.’s commercial law department has experience in representing various entrepreneurs, businesses, and corporations from Israel and abroad in a wide variety of legal areas.
