Benefits of Incorporating Yourself
As a business owner, there are many ways you can decide to legally structure your business. From registering as a sole proprietorship to a corporation, entrepreneurs must weigh the pros and cons before deciding which structure works best for their business model. While incorporating a business takes more time and up-front financing, the long-term benefits are often desirable to entrepreneurs.
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Credibility
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There's a certain level of credibility associated with an incorporated business. Clients, vendors and even potential clients perceive incorporated businesses to be long-standing, permanent companies that have serviced an abundance of clients successfully. This perception helps increase the amount of confidence clients and vendors have in the services and products you provide.
Personal Liability
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As a business owner, your personal liability is reduced if your business is registered as a corporation. Essentially, the only money the individual loses as a corporation is the money that he invested into the business. If your business has a debt with a company, the company cannot collect from an you, your home or other personal assets, such as stocks and bonds or other property owned, except if fraud occurs, there is faulty and illegal business reporting or when the owner's affairs are undeniably linked with the business.
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Business Lives
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If the owner of a corporation dies or is unable to keep up with the business due to health reasons, it does not mean that the business has to shut down. The business can run for an indefinite amount of time, going on to live out it's ultimate purpose, goals, merge with another company or ultimately be sold.
Transferring Ownership
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Businesses registered as corporations have the advantage of easily being sold, with the owner transferring or giving away her stake in a business with minimal costs, compared to the process for businesses registered as sole proprietorship or partnerships.
Anonymity
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As a corporation, the identities of the business owners do not have to be disclosed. You can own the business, but it doesn't have to be public knowledge as it would be with a sole proprietorship or partnership.
Tax Benefits
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In a corporation, the owners are able to deduct business expenses such as health care for the owners and employees, as well as business travel and business entertainment. These deductions are not available to companies registered as partnerships or sole proprietorship.
Investors
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A company that has taken the steps to become a corporation is more desirable to investors. They readily recognize that the business owners are serious about growing their business and focused on its longevity.
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References
Resources
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