The Benefits of Business Incorporation
Are you on the fence about incorporating your business? Whether it's a general partnership, a sole proprietorship or doesn't even exist yet, there are lots of benefits to having it incorporation. While incorporation isn't the right option in all situations, it tends to be the best way to go for most businesses. By considering the top benefits of incorporation your business, you can more easily decide whether it's right for you or not.
A few of the best benefits of incorporating a business include:
With an incorporated business, you'll be able to take advantage of many alluring tax advantages. Most notably, you will be able to write off all kinds of business expenses, including insurance premiums. You'll also be able to avoid paying self-employment taxes, which are a double-whammy of sorts that seriously cut into profits.
For one reason or another, you may not want your involvement with your business to be public knowledge. The only easy way to make this happen is by incorporating.
One of the main reasons that people opt to incorporate their businesses is to protect their personal assets. If you just have a sole proprietorship that ends up in dire financial straits, for instance, creditors could go after your personal assets to satisfy your business debts. With an incorporated company, you'll enjoy limited liability protection, which means that you can't be held personally responsible for your business's debts.
Sure, things may seem rosy with you and your business partners now. What's going to happen later, though? There are no guarantees. If your top concern is to keep your company intact regardless of its ownership structure, incorporating it makes all kinds of sense. By incorporating your company, you'll lay the foundation to ensure that it continues indefinitely.
People tend to think more highly of companies that are incorporated. It enhances credibility in a big way, and that doesn't only apply to customers. It also shows suppliers, business partners and others in the industry that your business is legitimate and trustworthy.
Incorporated companies have a much easier time raising capital. For one thing, they can sell shares to do so, which is something that's off the table for most other types of businesses. For another, lenders are more willing to extend lines of credit to incorporated businesses. You never know when you'll need a loan, and it's nice to know that getting one will be a lot easier.
This is by no means a complete list of the benefits of incorporating a business. Additional advantages include having an easier time establishing retirement accounts like 401(k)s and having a separate legal identity, which means that your company can sue others, be sued and own property.
Consider the benefits of incorporating your business carefully before moving forward, and check with a qualified professional to confirm that you're making the right move. Once you're satisfied that incorporating your company is the way to go, you can move forward when the time is right.