If you're a business owner with a sole proprietorship, you might be wondering whether it's time to incorporate your business. Lots of sole proprietors crave adding the coveted title of 'corporation' to their business, but few understand the advantages and protection they can enjoy from incorporating their business.
When you form a legal entity for your business, sometimes in the form of a corporation, you're taking your business to the next level. Not only are you showing the world that you're a serious business person, you're showing them that you are here to stay. And stability in a challenging economy is just what everyone is looking for.
There are several different legal entity options and it's a good idea to do some research, or even consult a professional, to determine which one is right for your business. In the case of a corporation, your business becomes a federally recognized corporation firm. You can have shareholders and for many business owners, this means big time business.
For many business owners, the tax benefits associated with incorporating your business are the biggest attraction. When you remain a sole proprietor, you're subject to what's referred to as 'double taxation.' Most people aren't too jazzed about being taxed once, much less twice. There's actually a special tax just for business owners called Self Employment tax and sole proprietors are required to pay Federal tax rate as well as the Self Employment tax. An incorporated business is eligible for certain tax breaks and advantages that are enough to make any business owner want to get up and dance.
Limited liability is another great advantage to incorporating your business. Sole proprietors run the risk of losing everything should someone decide to sue their business. Sole proprietors' personal assets are fair game in a legal battle regarding their business, and such an incident could leave the business owner with nothing. Corporations arm business owners with limited liability and they are only at risk to lose the amount of equity they invested in the corporation. In the event of a legal battle, the business owner's personal assets are off limits as the corporation acts as a stand-alone entity.
An incorporated business also gives you more credibility among clients, peers, and lenders. Banks and organizations are much more likely to back you in terms of funding or loans if you're incorporated. And with banks tightening their belts, business owners need all the help they can get when it comes to capital, financing, and lending. Incorporating your business can give you that extra boost you're looking for.
So just how do you get your hands on all of these great advantages of a corporation? Incorporating your business is easier than you would think. Incorporating used to take months, even years. Now, with the help of incorporation services, your business can become a corporation faster and easier than ever. You can be on your way to running a serious corporation in this seriously tough economy before you know it.
Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.
Melissa Gordon is the publisher of LegalBuffet.com, a complete online resource that compares the legal services offered by various online companies. Find the best company for your needs and incorporate now at http://legalbuffet.com/incorporation-services/.
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