Top 7 Reasons You Should Incorporate Your Business: Sole Proprietors, Partners, people considering starting a business have long discussed the values of incorporating. There are some very valid reasons to incorporate your business. Some may seem minor. Other reasons offer a comforting feeling that make incorporation a very important decision.
Do you want to protect your assets?
Imagine a customer or client decides to sue your business. If you are a sole proprietor (self-employed) then the client can come after all of your possessions, including your vehicles and home. This thought leaves most business owners queasy. As a corporation the client would go after the business and assets, and your personal property would not be under risk.
Are there tax benefits?
A corporation has lower tax liabilities. It can write off certain expenses that sole-proprietors can not. Corporations are typically audited less often than people who are self-employed. The corporations have additional benefits that your tax professional can explain.
Is my Incorporated business more credible?
Many businesses will only deal with businesses that are incorporated. Even some individuals feel more secure with a corporation than an individual. By going through the process of incorporating your business, people feel like you are determined to make it succeed over the long term.
Does Incorporation have a limited life?
In a partnership if one partner dies, the partnership is suddenly put on hold. With a sole proprietorship, if the owner dies the business is over. A business that has been incorporated can continue to exist and run as if nothing happened. The business can even be passed down generation to generation.
What if ownership changes?
Not only can an incorporated business be passed down generation to generation, owners can can change. If someone wants out of the business his shares of stock can be sold to other officers, to an officer coming in, to shareholders or combinations. Someone can diminish their role slowly or step out quickly and entirely. The whole business can be sold in similar fashion.
Can I keep my privacy?
Many people want to incorporate in order to maintain privacy. The rules on what kind of privacy are issued to officers depends on the state used for incorporation. Shareholders are safe in almost every case.
What about credit for a corporation?
Rather than worry about your own credit score or the score of the other officers, an incorporated business can have a credit score on its own. The shares can be sold to raise capital. Investors also like that the personal risk they might face with a sole proprietorship is virtually eliminated.
Are there more reasons to incorporate my business?
There are several more reasons to incorporate your business. Each state has different rules and each individual situation provides different answers. Most businesses will benefit and they will find there are even more advantages to incorporation. Corporations have certain rules and regulations but most work in favor of the business making it a very wise choice.
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