Starting Your Business -
Incorporating
Incorporate to Expand Your Company's Potential
by
Chris Robertson
Starting a new business is
often an exciting venture, but also involves many important decisions. One of
the crucial decisions you'll make concerning your new business is whether or not
to incorporate. Incorporating a small business has its advantages, of course,
but you should carefully weigh the requirements of incorporation to make sure
it's the right path for you.
If you're not sure about
incorporation at the start, you can even start out as a sole proprietorship and
incorporate later on as your business grows. Let's explore some advantages of
incorporation and how they affect your business.
Limited Liability
Probably the most
advantageous feature of incorporation is limited liability for your company.
This means that your personal assets such as your home, car, and other valuables
cannot be seized if someone sues your corporation. A corporation has individual
rights, meaning it can sue or be sued, incur liabilities, own property, etc. As
an individual shareholder in your corporation, you personally will only have to
assume liability for the amount you have invested in the company.
Easier to Raise Money
When you incorporate, your
business has more opportunities to raise the capital needed to grow. It's easier
to raise money through shareholders, and incorporating also means the business
will be able to borrow and incur debt just like a sole proprietorship. Your
corporation can also raise capital using equity.
Note: A drawback to
incorporating and allowing shareholders to invest is you will lose a percentage
of your ownership in the company.
Tax Benefits
Incorporating your business
also may give a potential tax deferral. You'll be able to defer tax payments
until a later date, and possibly enjoy a lower tax percentage rate if you happen
to be in a lower tax bracket at that time. You can also defer taxes in hopes
that the tax rates will fall by a certain time. When incorporating a small
business, the business may qualify for a small business tax deduction.
Income Benefits
A corporation offers some
income advantages as well. Your income can be dispersed to you at a time
determined by you. This allows you to possibly pay less tax (as mentioned
above). You can also split income or dividends with other shareholders, even if
your own family members are shareholders. This allows you to distribute income
to those in your family who are in lower tax brackets from those that are in a
higher bracket.
Other Benefits of
Incorporation
Corporations can live on
even when shareholders die or decide to leave the company. This means a
corporation basically has an unlimited life span. Another advantage of being
incorporated is this may help you attract more business. Being incorporated may
cause potential customers to see your company as more stable than companies that
are not incorporated. Some larger companies will only do business with an
incorporated company because of liability issues. Incorporating also gives your
business name a more professional tone.
If you're not sure about
incorporation, another option to consider is LLC formation. When you form an LLC
(limited liability company), you will incur some similar benefits of an
incorporated business but without so many formalities. There are no ownership
restrictions for LLCs, so anyone can own interest in the company. Owners of an
LLC are called members instead of shareholders.
Whichever option you choose,
consider online incorporation or forming an LLC online. This makes the process
quicker and easier as well as more affordable. Online incorporation makes it
simple to take your small business to the next level!.
Chris Robertson is an author
of Majon International, one of the worlds MOST popular
internet marketing
companies.
For tips/information, click
here: incorporate
Visit Majon's
Business and Entrepreneurs directory .
Article Source:
ArticleRich.com
<TOP>
     
|
