There are many reasons for incorporating but
the most important to consider are the benefits of incorporating and the
implications that it may have for your business. A quick examination of all the
benefits to be derived from incorporating will reveal that the best time is
when you are actually taking your startup business from inception to reality.
Consider all of these corporate advantages:
1.
Limited Liability
Incorporating your business is really about
protecting your personal assets. Anyone who starts up a business will find it
taking up a major portion of their time but that doesn’t mean you have to
assume a total risk with everything you own. By incorporating your business you
are drawing a clear line between your personal asset and the assets of the
company. That way if anything should go wrong with the company, you’ll still
have your personal property. It’s important to keep those two aspects of your
life separate.
2.
Attracting Investors
When you incorporate your business you’re
also telling potential investors that you’re serious about your company’s
future. That is going to make getting money from investors a lot easier. Any
investor will be taking a risk by giving you capital. You can make them feel
more confident with a professional approach to your business plan through
incorporation.
3.
Tax Issues
Just as incorporating your business will
protect your personal assets it can also help improve your tax filing status.
With a corporation, you have the ability to defer paying taxes to a time during
the fiscal year which will be more beneficial. This also applies when you
accept an income. The goal should be to work with your accountant to find a
proactive way to reduce your tax burden which can ultimately allow you to
reinvest in the business. There are also a wide range of small business tax
deductions which can help you make improvements but they would only apply to a
business that has been incorporated.
4.
Better Client Prospects
If an investor feels better investing in a
corporation then a potential client will also share those feelings of
confidence in your business. Incorporating your business projects a level of
stability to customers. They know they’re not dealing with some “fly-by-night” organization but someone
who is in for the long haul of providing service.
5.
Corporate Legacy
For all practical purposes, a corporation
is a legal entity that can far outlive the lives of its founders. When you can
move your company into the realm of Fortune 500 type of businesses then the
hope is that they’ll be around long after the original board has gone onto
greener pastures. A corporation is about longevity which is exactly what you
should be focused on for your new business.
