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It may be a mistake to think that your business is too small to consider becoming a corporation. When people think of one, they likely imagine large buildings, thousands of employees, and even multiple locations.
The question of whether to incorporate is not just for those companies. It applies to partnerships and sole proprietors as well. Even if you are at the earliest stages of a business and all you have is an idea and a drive to succeed, choosing to incorporate (or not) should be a stop on your road map.
Regardless, take a look at some of the benefits that incorporation offers you.
Asset Protection
You would be hard-pressed to find a better opening reason to form a Limited Liability Company (LLC), an S Corporation, or a C Corporation than asset protection. Specifically, this applies to your personal assets that are separate from your business—for example, your home.
Incorporating provides a legal wall of protection between your personal belongings and your business. Why do you need this? If your company has debts it cannot pay, your creditors cannot seize your personal assets as collateral.
Another way that people may come after you is through lawsuits. If someone files a civil suit against you, whether they are a vendor or a former employee, your personal assets that are unrelated and unconnected to the business are not at risk.
Taxes
Simply put, there are tax advantages that incorporated businesses receive that sole proprietors or individuals do not. Although you may hire an accountant or an attorney to assist you with these aspects, you will give them more to work with when you have incorporated.
Things such as revenue losses can be accounted for over a period of time. If your business offers benefits such as health insurance and life insurance, this may give you a tax advantage through deductions. And these deductions simply don’t apply to individuals.
As someone who may be just starting, the front-end costs of building a business can be high. An outside professional such as a business law attorney or accountant can go over how you, as an incorporated business owner, can legally deduct some of these costs. The money you save may go right back into your business.
Drucker & Mattia, PLLC
Drucker & Mattia, PLLC has extensive experience representing business owners for a variety of legal matters. We are proud to represent everyone from startups to established institutions. If you have further questions regarding anything connected to business law, contact Drucker & Mattia to schedule a free initial consultation.
Drucker & Mattia PLLC
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