Is Roto Rooter Incorporated?
Roto-Rooter is incorporated in the state of Delaware. To be incorporated means that the company is a “separate legal entity”, which gives it certain legal benefits, that include several tax compensations, and creditors cannot come after the personal assets of the owners that have been incorporated. Moreover, Roto-Rooter is a subsidiary of the parent company, Chemed Corporation. Chemed Corporation can have some level of control over its subsidiary regardless of incorporation, as it has most of the stake/ownership in Roto-Rooter.
Postulates of Incorporation
When a company is incorporated, it becomes a separate entity legally from its ownersAny company can be incorporated by indulging into the articles of incorporation (legal documentation)The main purpose of incorporation is to obtain limited liability
Benefits of incorporating a company
There are many reasons why the owners decided to legally incorporate the company. Some of the advantages are:
Separate legal personality
This means that once the company becomes incorporated, by the Companies Act of 1956, it becomes just like any other individual with its rights and personality
Liability becomes limited
This is one of the major reasons for incorporation. In this case, if the company has been incorporated, and goes into bankruptcy, the creditors will not be able to come after the assets of the shareholders. The shareholders will only pay the amount attached to their share in the company.
Existence
When the company gets a corporation status, it will exist everlastingly even if the members change, like in case one of the board members or shareholder passes away, it will not affect the existence of the company.
Shares can be transferred
By law, the shares of an incorporated company can be moved or transferred. This led to investments and the ability to get quick liquidity for the shareholders if need be.
Property
Since the company becomes a separate legal person, it can have property owned in its name. And thus, if any of the shareholders choose to tamper with it, they can be held criminally since the property is owned by the company, not any other person.
Ability to sue
The company can sue anyone, if need be, or be sued in return since it is a separate legal person after being incorporated.
Autonomy
The company has the freedom to postulate its own rules and regulations, following the general law.
Tax
The company gets a tax benefit in the sense that the salary of the shareholders is taxed at a different rate than the taxation on the business income, which can be quite a lot.
Types of Incorporations
Companies can be registered as corporations under these types:
C corporation
Shareholders are unlimitedDifferent taxation rate on the company than on shareholders Assets of the shareholders cannot be sought by creditors Shares determine ownership
Roto-Rooter falls under this category of a corporation
S corporation
The maximum number of shareholders can be a 100
Assets of the shareholders cannot be sought by creditorsTaxation applies to the shareholders and can be bypassed by the S corporation itself
B corporation
This type of corporation is oriented toward benefitting the society Is to profit and contribute to the environment
Closed corporation
Only a few shareholdersUsually applies to small businessesShares do not step into the market for tradingAssets of the shareholders cannot be sought by creditors
Nonprofit corporation
It is formed for charitable orientation and the welfare of the society Profits are not divided among the shareholders, they go to charity
Steps to Incorporate a Company
To give the status of a corporation to a company, follow these steps:
Setting the rules of the corporation, which are called “articles”Giving it a unique name Set up the information about how many stocks the corporation will have and how they can be traded Add the legal agent’s name, address, and office details. Adding the names and addresses of all those who signed the article of incorporationClearly stating the purpose of incorporating Customized according to your needs, like stating that the company is a separate legal person from the shareholders, etc. Finally, officially filing the company with the concerned office by state, in exchange for a filing fee
Conclusion
Roto Rooter’s incorporation ascertains all the benefits discussed, especially the fact that creditors cannot come after the assets of its shareholders. Chemed Corporation being the parent company was able to enter the market of plumbing services because of Roto-Rooter, the subsidiary.
Do corporations have double taxes?
Yes, but at different rates of the company and stockholders.
