5 Reasons to Incorporate Your Business

Share
Business owners meeting at a table

Most new businesses start with no thought about legal structure. In the eyes of the IRS, the default structure is a 'sole proprietor,' in which your business profits are taxed on your personal tax return. This can serve you well to start, but there are several reasons you may want to consider incorporating as your business grows.

1) To Protect your Personal Assets from Creditors

When you operate your business within a corporation, creditors are often limited to corporate assets to satisfy a debt. Your home, savings, and retirement accounts are no longer fair game.

2) To Provide a Personal Liability Firewall

The corporate form can help protect you against claims made by others for injuries or losses arising from actions of your business.

3) To Issue Shares of Stock

You can help build your business by issuing shares to new investors, or by offering stock options to key employees as a form of compensation.

4) To Gain Tax Flexibility

A corporation can provide you with more tax flexibility. Deliberate planning can help optimize the taxable division between corporate income, dividends, and your personal wages.

5) To Enhance Your Business Presence

Being incorporated sends a signal that your business is a serious enterprise, and it could open doors to opportunities not offered to sole proprietors. Consumers, vendors, and other businesses often prefer to do business with incorporated companies.

If you are still going over the pros and cons of incorporating your business, give our office a call.


Share
Disclaimer

The information in this article is written as accurately as possible and to best of the writer's knowledge. However, there may be omissions, errors, or mistakes. Because of this and changes in circumstances, the information in this article is subject to change. This article is for informational purposes only and should not serve as professional, financial, medical, emotional, and/or legal advice. Readers may rely on the information on this article at their own risk, but they should consult a CPA, financial expert, or other professional for advice. Givilancz & Martinez, PLLC reserves the right to change and handle this article series, and therefore, may remove or alter any part of this article or the comments section. Any comments inserted by readers are not the responsibility of G&M PLLC and do not represent the thoughts or ideas of G&M PLLC.