Incorporating might sound like a fancy term that only applies to the big companies, but it is crucial for many small businesses to make their business official. Once I was officially starting to drive revenue and grow my company – I incorporated my business. When you incorporate your business, it means separating it from yourself, providing you with legal and financial protections. While incorporating your business entails documents and filling out forms online, the process is best done under the guidance of a legal counselor or a company such as Corpnet that guides you through incorporation, LLC, and follows up with you on compliance and financial due dates. This shift can lift an incredible weight off your shoulders and allow you to focus on the new opportunities within your business as a sole corporation. Listed out below are the top reason Corpnet believes small businesses should incorporate.
If you wish to have someone else do it for you, Corpnet has kindly sponsored this post and is extending a fantastic offer to Badass CEO listeners and readers. Click here to learn more.
Corporations have a much lower annual tax rate than sole proprietors and have more eligibility for deductions. Many owners incorporate their businesses to cut down on tax costs and write off business expenses such as travel, production, and office costs.
Perpetual Life For The Business
Sole ownership of a business constitutes that if the owner were to pass away, the business dissolves with his/her passing; thus, transferring or continuing the business becomes an uphill battle. A corporation has its own identity, and this its own “life,” meaning if the owner passes, the company continues until dissolved by a majority vote. Transferring and selling off the corporation is also an easier problem as it is an independent entity from its owner(s).
Ownership Is Transferable
Continuing the last point – if there comes the point where you want to hand over the business or transfer it to be run by a larger corporation, then having an LLC/corporation makes it that much easier. You can quickly transfer corporations through monetary or stock exchange while you cannot transfer a sole proprietorship to a third party.
Asset protection is a HUGE part of why many businesses get turned into an LLC – a standard sole proprietorship means your business is attached to you (in every sense). Still, a corporation is an entity, and any debt or liabilities fall on it rather than the owner. This can mean that if the business ever defaults on the lease or there is debt accrued due to business expenses, this financial weight is not transferable to the owner affecting the credit and his/her financial records.
Creation of a Corporate Identity
A simple yet compelling reason to incorporate is the added credibility and marketing effect of having “LLC” or “Inc.” to your business title. People search for and are drawn towards verification that what they are spending money on is worth it, and this “seal of approval” is precisely what they want to see.
As you can see, even though incorporating seems like a daunting task, there are many benefits to incorporating your business. Don’t make the mistake I did, and try to do it yourself when you can have Corpnet or other similar companies do it for you!
*This blog post is sponsored by Corpnet and I will make a small commission when my link is used – thank you for your support!*