If you are an entrepreneur or small business owner just getting started, you will have to figure out what the best type of business is for your situation. Hiring a great business attorney is one way to get some expert advice, but ultimately the decision will be up to you. There are plenty of business owners mulling over the decision of incorporating their business. It doesn’t matter if you are just starting your business or if you have had a successful sole proprietorship for years, forming a corporation certainly can be a great decision. Below, we will be touching on a few great reasons why incorporating your business can be the right choice.
1. Limited Liability
Perhaps one of the biggest reasons why many business owners decide to form a corporation is thanks to the fact that it offers limited liability protection. With a corporation, the business owner won’t be directly responsible for any debts and liabilities from the business. That means you won’t have to forfeit your personal assets if the business isn’t able to cover its debts. Limited liability is certainly an attractive feature that makes corporations a nice option for business owners.
2. Easier to Raise Capital
One of the most challenging parts of starting or growing a business is finding the funding you need to execute your vision. If you decide to incorporate your business, you can easily raise the capital you need through the sale of stock. You will be selling shares of your company to individual investors in exchange for capital. Additionally, banks tend to prefer lending to companies that are incorporated versus other business types.
3. Tax Benefits
Taxes are a reality for every business owner on the planet. That’s why tons of business owners end up choosing a corporation for their business. Corporations can often times get tax benefits that allow them to deduct certain expenses and save money. You should definitely talk over potential tax benefits with your business attorney and accountant before you make your final decision because every business has a different situation. That being said, don’t ever underestimate the tax benefits that are possible when you form a corporation.
4. Unlimited Life
Another great reason to consider incorporating your business is that a corporation will exist perpetually. That means if an owner or founder passes away, the business will continue running as usual. Things can get complicated if an owner passes away and the business is not a corporation. If you are looking for a business type that will live on long past the lifespan of its original founders, the corporation is probably the right choice for you.
We hope this article has provided you with some valuable information about corporations and why they can be such a great option for entrepreneurs and small business owners. If you have any questions about which business type might be right for you or would like assistance with officially incorporating your company, reach out to Derryberry & Associates LLP today.