Advantages of incorporating your business
Incorporation is the act of forming a new corporation—but it isn't as simple as adding Corp. to the end of your company's name. Instead, it's a process that ends by making a business, non-profit organization, sports organization or government body recognized as a person under the law. The process of incorporating a business has several different steps and benefits. It requires the preparation of relevant documents, none more important than "Articles of Incorporation" which are filed with the Secretary of State. Some incorporation services can be accessed via the Internet; online incorporation could help you fast-track the process.
For the average organization or business undergoing incorporation, there are several evident benefits. For one, it shields those within a corporation from liability. What does that mean? Well, if one operates an unincorporated business, then creditors could have access to the owner's personal assets, like a house or car. A personal residence and back account could be used to pay business debts or the outcome of a lost lawsuit. After incorporation, business creditors cannot touch these kinds of assets because the owner of a company and the business become entirely distinct entities.
Second, business incorporation can help establish the perpetual existence of a company (meaning it won't be terminated if one of the owners dies), and it opens the door to new management options, such as the transfer of ownership.
Third, and perhaps most important, are the tax benefits that come with incorporation. Tax deductions under incorporation are associated with various types of operating costs that may include the purchase of vital materials, the paying of employees or purchasing insurance. An interesting tax-saving alternative is offshore incorporation. For more information on this subject, companies should consult a tax attorney.
Fourth, incorporating a business can prove to be an effective management strategy by centralizing decision-making and placing authority with a Board of Directors. However, this kind of idea varies widely depending on the size of a company.
Finally, incorporating a company can help improve its public image. It sounds a bit silly to say it, but the addition of Corp., Inc., or LLC to a business moniker can help legitimize it in the eyes of common consumers and could even make accessing financing from banks easier.