The BizFilings blog covering business tips and trends.
Why should you incorporate your small business?
Nov 19, 2013, 00:27 AM
We break down some of the key advantages of changing the format of a small business to a corporation or a Limited Liability Company (LLC)
As a small business owner, it’s common to launch your company as a sole proprietorship in which you and your business are essentially one and the same. However, entrepreneurs should consider the protection that incorporation offers, regardless of the business size. We break down some of the key advantages of changing the format of a small business to a corporation or a Limited Liability Company (LLC):
Corporations are eligible for a number of tax breaks. If your business is incorporated, you have the opportunity to explore credits for providing health insurance, starting a retirement plan, providing child-care, improving access for the disabled or providing work to disadvantaged individuals.
Securing your personal assets
In order to fully protect your business and personal assets, you need more than insurance. It’s crucial that business owners take steps to place assets beyond the reach of creditors. As an incorporated business, you will not personally be responsible for your any business debt, as you are conducting your business in a manner that separates business assets from your personal assets.
Heightened credibilityForming an LLC or corporation helps new businesses establish credibility with potential customers, employees, vendors and partners because they see you have made a formal commitment to your business.
Planning for retirement
Ensure you can retire at the time of your choosing by assessing your current resources and building a savings and investment plan that accommodates your situation. Incorporating your business makes it easier to establish retirement funds like a 401(k).
Protecting your name
In most states, if you are an incorporated business, another business cannot file as a business with the same name. This helps build brand recognition amongst your customers and community. It also helps protect your business’ reputation from being tarnished by the doings of another business with the same name.