(Trenton) – Bipartisan legislation sponsored by Assembly Democrats Craig Coughlin, Paul Moriarty and Thomas Giblin and Republican Jack Ciattarelli that allows psychologists to incorporate was approved by the Assembly today. Currently, occupations such as physicians, surgeons, architects, dentists and chiropractors may incorporate, but psychologists cannot.
“From a business perspective, this is the fair thing to do,” said Coughlin, D-Middlesex. “Psychologists should have the flexibility afforded to other medical professionals when it comes to protecting their business interests.”
“Incorporating may not be the answer for every business owner, but one group of professionals should not be denied the opportunity many others enjoy,” explained Ciattarelli, R-Somerset, Hunterdon, Mercer and Middlesex. “Psychology practices are as important as any other small business, including those that engage in providing professional services. By allowing psychologists to incorporate, we are providing ownership with more options for achieving their business objectives.”
“Incorporation carries many benefits not currently offered to psychologists who operate on their own,” said Moriarty, D-Camden/Gloucester. “Whether it’s legal protections or better access to capital, incorporation can help a business professional grow and in turn benefit the economy.”
“Once incorporated, a psychologist, or any other professional, has access to tax and finance benefits they might not otherwise,” said Giblin, D-Essex/Passaic. “This can help them expand, perhaps hire more employees, and generate additional income.”
The legislators cited several advantages for businesses to consider incorporating which were detailed by the California Society of CPAs:
1. Protect Your Personal Assets – one of the best ways to protect your personal assets. A corporation can own property, carry on business, incur liabilities, and sue or be sued.
As a separate legal entity, a corporation is responsible for its own debts. That means creditors of a corporation generally can seek payment only from the assets of the corporation. In effect, that means business owners can conduct business without risking their homes, cars, savings, or other personal property.
2. Easier Access to Capital – raising capital is generally easier for a corporation, since a corporation can issue shares of stock. This may make it easier for your business to grow and develop.
3. Enhance Your Business’ Credibility – the benefits of incorporating go beyond finances. Suppliers, customers and business associates often perceive corporations as being more stable than unincorporated businesses.
4. Perpetual Existence – corporations are the most enduring legal business structure. A corporation can continue indefinitely, regardless of what happens to its individual directors, officers, managers, or shareholders.
5. Other Considerations – as a separate legal entity, a corporation is taxed on its profits. Those taxable profits can be reduced by qualified business expenses, including operating expenses, marketing and advertising expenses, travel and entertainment expenses, and other costs of making a profit. An incorporated business may also deduct employee salaries, health benefits, and contributions to qualified pensions and retirement plans for employees.