When you are a small business owner there are so many things you need to keep in mind to make sure your business is growing and you are protected. One way to do this is to incorporate your business. Not exactly sure what that is? When you form a corporation you are separating yourself from the business. Your personal assets are not tied to your business.
There are many advantages to incorporating. As mentioned earlier, being incorporated separates your personal assets from the assets of the business. This is a smart business decision to make. A business can be sued if someone gets hurt. It’s a huge piece of mind to know your home, bank accounts and any stocks or bonds can’t be at risk if your business suffers a loss.
Another advantage to become incorporated is how much easier it is to raise capital. Banks look more favorably on loaning money to incorporated businesses because they have more options for raising capital to pay back the debts. The better you look to a bank, the more chance you have of obtaining loans for expansion or other business need. Corporations have the ability to issue stock in the company to raise money.
Corporations also come across as more stable to suppliers, business associates and customers. The word “Inc” or “Corp” following your business name gives it a permanence and credibility. It says to the business community, “I’m here for the long haul.” Your business doesn’t appear to be a temporary thing.
Those people who form a corporation have the benefit of anonymity. All affairs of the business are done by “the corporation”. Individuals’ names are not readily available to the public. There have been incidents of a family forming a corporation to claim a big lottery win. They get their winnings and the public doesn’t know so their privacy isn’t disturbed.
Corporations also have a benefit with taxes. A corporation is taxed on the profits of the business and can’t be added to the earnings of the owner. Adding the profit to the earnings would place the owner in a much higher tax bracket.
As you can see there are many reasons to incorporate your business. Money is easier to raise, your personal assets are protected and your business comes across as credible and stable. What more could you want? The process is not difficult. Any lawyer who specializes in financial law will be able to walk you through the steps.
