Many people start their business on a fairly informal basis and operate as a sole proprietor. While this may seem like a simple solution, it isn’t a wise approach once you start making real money or operating on a larger scale. Instead, it’s wise to legally organize your business as a corporation or an LLC. Below are four reasons to take this approach.
Protection of Personal Assets
Incorporating your business helps create separation between you as an individual and your business. This means if someone sues your business, they are only going to be able to get the assets of the business and not your personal assets. This level of protection is extremely important for keeping your personal possessions safe.
There are a variety of tax advantages that you can enjoy when you are incorporated and not operating as a sole proprietorship. To start with, you will often be paying taxes as a separate entity than yourself, which can reduce the overall tax rate you pay. Additional deductions are also available for most businesses.
Existence in Perpetuity
When you incorporate your business, it will remain in existence even if you pass away. This makes it much easier to pass on your business to a loved one, or anyone you would like, in the event of your death. It can also make it easier to sell your business to someone else if you choose.
Brand Protection & Credibility
When you incorporate your business, the name is going to be protected as part of your overall brand. This will help ensure that another individual does not copy your exact name, which can be very important for branding and marketing. Having an LLC or INC after your name also lends additional credibility to the business in the eyes of some customers.
If you are thinking about incorporating your business, you will want to work with an experienced business attorney to help you through the process. Please contact us today to learn more!