6 Benefits of Incorporating your Business 2 years ago

Have you recently opened a business? Wondering how incorporating your business can help you?

Businesses, not only well-established, benefit from incorporating–Since a corporation is a separate legal entity wholly distinct from the person who owns it.

Here are six (6) benefits of incorporating your business:

1. Limited Liability 

The owners are not personally liable for the obligations and liabilities of the company because they are considered a separate legal entity from its owners. That implies you cannot be held personally responsible if someone decides to file a lawsuit against you.

2. Protect your Assets

When it comes to experiencing financial difficulties, a corporation is accountable for its debts because it is a distinct legal entity. As a result, the owner and its shareholders are not responsible for the company's debts. Creditors cannot seize your home or personal assets.

3. Transferable Ownership

It is simple for shareholders to transfer control of a company by selling stocks to third parties. However, some entrepreneurs prefer to run their businesses as privately held corporations because they desire to limit the transferability of their stock.

4. Better Access to Capital

Incorporating your business allows you to sell stocks, which makes it simpler to raise capital. Additionally, many banks require an incorporated business as collateral for small business loans.

5. Business Continuity

A corporation has unlimited life, which means it will function even if one of its owners passes away or decides to sell its share. It enables entrepreneurs to develop a long-term strategy for business expansion, and re-establishing is no longer necessary.

6. Tax Benefits

A corporation gets taxed on its profits because it is a distinct legal entity. Its tax advantage is that it may be subject to less taxes than sole proprietorships. 

The highest income tax rate for individuals is 35%, while it is 25% for corporations. However, this may depend because different corporate structures have various tax benefits. 

Even though incorporation has many advantages, it might only be ideal for some types of businesses. 

You may read Startup Guide: Business Structures, or you may consult with our legal experts to guide you with incorporating your business.