Whether you are just starting out or your business is well established, the best decision you can make for your business is incorporation. The belief out there is that incorporation is a reserve for the establishments that have been around for decades. However, that is not true. Even small enterprises can reap huge benefits from incorporation.
Should you decide to incorporate, these are the benefits you stand to enjoy:
- 1. Your Personal Assets Cannot be Touched by the Creditors
Being your own boss is exciting for most entrepreneurs. A good business person knows, however, that mishaps happen and businesses sometimes go down. If that happens, you stand to lose just about everything to your creditors. Incorporating your business as a limited liability company protects your personal assets. Your creditors can come for your business, but they cannot touch your personal assets. If you are yet to incorporate your business, your personal assets and the business assets are linked, so the creditors can scoop everything. You had better get incorporated, and fast.
- Protection from Lawsuits
The same idea applies here. If your personal assets are separate from your business, then even lawsuits cannot touch them. If they are all bundled together, then any lawyer can get their hands on them, and there isn’t much you can do about it. That means you risk losing your home, your car, and any other personal possessions. You do not want to imagine losing your home because an accident happened on your business premises. You are after all liable for any accidents that happen on your premises.
- You Will Save Money and Enjoy Some Tax Benefits
Incorporating your business comes with perks like tax cuts. You might be eligible to enjoy tax deductions on:
- Life insurance
- Health insurance
- Self-employment taxes.
However, unless you are an expert on taxes, consult with the experts like a CPA before you make any claims.
Other benefits you will enjoy include:
- Deduction of business losses.
- Deduction of fringe benefits like insurance.
- Being able to claim funds for daily business operations.
- Deduction of social taxes payable to the system.
- You will be able to save some of your investments.
- You can claim travelling expenses as long as they are tied to the business.
- Raising Capital
It is easier to raise capital when your business is incorporated than when it is a sole proprietorship. You can open a bank account in the name of your business and start building it so that you can qualify for loans. Websites like www.acrafile.com and other related sites have a lot of information concerning incorporation vs sole proprietorship.
- It is Easier to Sell an Incorporated Business
Should you ever decide to sell, it will be easier to find a buyer when your business is incorporated. The idea of selling might send your eyes rolling now, but in business, it pays to have one eye on the future. It is always good to have that advantage. Here are a few reasons why corporations are easier to sell:
- They are easier to track as well as to manage.
- Investors are more likely to go for corporations because they have the illusion of stability.
- Investors see the business as a separate entity from you, the business They therefore have the assurance that should they need to make any changes, they will not be stepping on your toes.
- Reputation Goes up a Notch
The business is no longer about you. It has its own name and life. You are the owner of a corporation, not just a proprietor. Therefore, your worth as a business person goes a few notches higher, as does your business. The professional image even gains you a bevy of new customers who are attracted to the level you have achieved.
- You Create a Brand that Must be Protected
Now you have a logo and a phrase that can be associated with your business. You have a brand. However, the way you operate your business affairs says more about your business than a logo and a phrase. The quality of your products, where you are located, and the look you create for your business are all part of your brand. Incorporating your business protects your business image and lends credibility to your brand.
By incorporating your business, you:
- Protect the name of your business. Anyone else using that name risks facing a massive lawsuit from you.
- Gain recognition for your brand. Your logo and business colours that symbolize your brand are easily recognized.
- Get a trademark for everything that has to do with your business. This includes the labels, slogans, and designs therein.
- Transferring Your Business Made Easy
Should you decide to transfer your business to your child, much later on of course, especially in the event that you are suddenly taken ill, it is easier to do so when it is a corporation. In a sole proprietorship, your business and personal assets are linked. The process of valuing your business for sale or for a transfer becomes rather long and tedious. You must separate your personal assets from the business assets, and then they have to be valued. Only then can you effect the transfer or sale. That can take quite a while, and can also be stressful especially if the transfer has to be done fast.
Whatever your vision for your business is, your business will benefit greatly if you incorporate it. It will be so much easier to run business operations when you can use funds which are separate from your own to run the business. It also gives you peace of mind to know that should the unthinkable happen, your personal possessions are protected because they are set apart from the business. There are more advantages to incorporating your business than there are to running it as a sole proprietorship.
The best way to get more information about businesses and their day to day running is by reading widely; not only from books, but also from websites that have more information about incorporating your business, and the benefits that follow.