Everything good in life presents some form of a barrier of entry that usually deters the common traveler. It’s no different when it comes to starting a business and what seems to hold people back from starting their business is just that — starting their business. To the optimistically ignorant entrepreneur embarking on their first venture, the incorporation process can seem like daunting task but it does not need to be, you just need to know the facts.
Why do you need to start a business?
If you have a business that you’ve been operating without taking the proper steps to incorporate, do not fear, you’re not the first. Many people operate — for years at a time — without the incorporation but that doesn’t mean that it’s fine to do. You will face more disadvantages than you would advantages. And if you’re working hard on a business to provide the ability for you to personally acquire more wealth and assets, this is exactly where the trouble lies.
What Business is the Best?
When it comes to incorporating your business, what makes the most sense for you is not necessarily what makes the most sense for everyone. There is no set formula for how you should incorporate but there are some guidelines to follow. Take a look at this chart to better determine what is best for you:
Are you still wondering why incorporating a business is a good move for you? Below are 3 of the basic benefits an incorporation provides for your business. Pay close attention to them as many people have unfortunately had to learn the hard way for themselves.
Protect your Personal Assets:
Many people start operating a businesses without actually starting a business. That can be a dangerous move. You can get away with it—and many startups do—but, for how long? What is most at risk when you’re running a business that is not incorporated is you and everything you own. If someone brings a successful lawsuit against you, all of your personal assets are at risk.
Get some Tax Flexibility:
Having a business provides many tax advantages, savings, and benefits that are not available to sole proprietors. For example, if you chose S Corp status for your incorporation, you’re able to pay yourself as personal income and the rest as shareholder dividends. What’s important to know about that is shareholder dividends are typically taxed at a lower rate meaning less taxes for you to pay.
Credibility = Success:
In today’s world, credibility rules everything. The internet is where people can talk about your business, review your business, and refer new business your way. Consumers, partners, and vendors are more likely to work with a credible business as it adds a layer of protection for them as well.
These are just some of the basic, but most of all, important facts to know. If you have additional questions about your business, feel free to reach out to @TrueMerchant!