Are you a start-up business owner? Are you considering the option for incorporating a business? Then we would say that you are definitely thinking in the right direction. Most of the business owners, specifically the ones who have just begun their journey, often go for a sole proprietorship when registering their business. But if you want to get more advantageous, then you would find that incorporating a business or forming an LLC is a better option.
Here are some reasons/ benefits on why one should consider incorporating a business.
When you are incorporating a business or forming an LLC, you have the option to keep your personal assets from having liability on the company. The owners and the shareholders when incorporating a business will have a limited liability on any kind of business obligations or company debts. Incorporating a business helps the owners to keep their personal assets protected during trying times.
Incorporating a business offers more credibility to it. It is a common understanding and observation that people put more trust in companies that have a name ending with Inc or LLC or corporation. This is one of the major advantages in incorporating a business and can also help in improving your brand image and serve as a marketing tool too.
When you are incorporating a business, irrespective of whether there has been a change to the stake holders or there is a change in the management, it continues to exist perpetually. This is true either when you are incorporating a business or forming a LLC. This is unlike the other business structures like sole proprietorship. Unlike when you are incorporating a business, in other cases, the business has to be reformed in the event of the owner’s demise.
Whether you are incorporating a business or forming a LLC, you will find that the expenses like the salaries of the employees are deducted from the overall income before the same is allotted back to the owners.
When you are incorporating a business, you have different options to choose from like LLC, S-corp and C-corp. In terms of LLC the P&L of the company gets reported on the owners’ personal income and there is also limited liability in incorporating a business. When you set up a corporation though, you might be taxed twice, once as a corporation and once as an individual. Again, you can escape this double taxation by choosing S-corporation while incorporating a business.
Now that we have seen the few benefits of incorporating a business, choosing the structure is entirely left to the decision and discretion of the business owner. When you are incorporating a business, keep in mind that every type of corporation and LLC has a different set of benefits to gain. When you are incorporating a business, you get a safety net protecting your personal assets. Incorporating a business helps you to carry on with your life, even if you suffer a setback in your business.