5 Reasons To Incorporate Your Small Business
Are you a small business owner and you don’t know whether you should incorporate your business or not?
You see, there are 4 main choices you have when it comes to running your business.
First, as a sole proprietor or Limited Liability Company. Then there are the S and C Corps.
The SBA reports that over 80% of all small businesses are sole proprietors. All of these businesses stand to benefit in many ways, by incorporating.
Here are 5 reasons to incorporate your small business:
Reason #1. Protect your personal assets.
Incorporating is like putting up a wall between your business and your personal life. Whatever happens with your business does not affect your personal liability.
Reason #2: Add credibility and legitimacy.
When you incorporate your business, by adding LLC or Inc to your business name, you seem more like a real business, especially to those who don’t know you. Since people want to do business with credible companies, this is a good thing.
Reason #3: Build your business brand.
With an S or C corporation you have sole rights to the name of your business in your state. It is smart to have a catchy name people remember, or that include benefits of what you do. Since no one can use the same name you do, the more you promote your brand the more you will benefit.
Reason #4: Enjoy tax benefits and save money.
By electing to be taxed as an S corporation, you can avoid the dreaded double taxation. This means you won’t be taxed on your business income, plus your personal income, which in many cases for a sole proprietor, is the same.
Reason #5: Establish credit for your business.
Why rely on your personal credit for business expenses, when you can build business credit instead? This means your personal credit lines will not be affected by the amount of business credit you are using. Your business and personal credit are completely separate when you incorporate your business.
Whenever you start, change or dissolve a business entity, it’s wise to get the help of a CPA who deals with businesses and the taxes business and individuals pay.
Their help will come in handy when completing your yearly tax return, and when any issues about your taxes, income or business come in to play.