Why Incorporate Your Business?Brian Jang ON January 7, 2016
You have turned your dream of starting a new business into a reality. You are gaining more customers, cash flow is good, and revenues are finally surpassing expenses. This is normally the time when many new business owners consider whether or not to incorporate their business. Whether you are starting a new business or running an established company, here are some of the main advantages of incorporation.
One of the key reasons for incorporating is to protect your personal assets. When you incorporate, your business is considered a separate entity, which means the corporation incurs the liabilities, not the individual proprietor or partners. Subsequently, your personal assets—car, house, or personal savings—will be protected from corporate creditors and/or lawsuits.
Easier To Raise Money
Corporations also have greater ability to raise more money. This will be extremely helpful when it comes time to expand and grow your business. As a separate legal entity, the credit worthiness is evaluated on the corporation not on the credit worthiness of an individual. What’s more, corporations are the only entity with the capacity to issue stock, making it easier to raise capital, when compared to other business types.
Reducing income taxes is usually another important reason why businesses incorporate. As a corporation, you will have the advantage of tax deductions from several sources, such as salaries, bonuses, operating expenses, and advertising costs, saving you money down the road.
Having Ltd., Inc., or Co. attached to your company’s name can improve the image of a business. Incorporating your business adds a sense of professionalism, which will help demonstrate to clients and customers that your company is a legitimate operation. In fact, many people will only do business with incorporated companies, giving you a crucial advantage that may increase your business.
Incorporating is an important decision that will affect many facets of your business. So, it is a good idea to speak with your financial advisor to help you understand if incorporation is the right move for you.
Thinking about incorporating your business? BCJ Group, Chartered Professional Accountants, is here to help you understand the advantages of incorporation. Our team of experienced accountants work with you every step of the way, providing the accounting solutions you need to reach your business goals.
For a free consultation, contact us today!