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If you own a business and have been going back and forth about incorporating it (making it legally recognized), here are some reasons why you should consider doing so.
You won’t be at risk of losing your home. As a sole proprietor, you are the same as your business in the eyes of the IRS. If someone were to sue your business, they could win your business earnings as well as your personal assets. This includes your home, your car, and savings. However, by incorporating your business, it will become a separate entity. This protects your personal assets.
You’ll save money. Your business can benefit from tax savings, but it depends upon the entity type. You may have some additional paperwork to fill out, but that’s nothing compared to the amount you will save by doing so.
You’ll make more money. Once you’re incorporated, you can increase funding for your business in many different ways. Depending upon the type of business you own, you could accept bank loans, private investments, stock sales, donations, etc.
You’ll be seen as a professional. Incorporating your business adds legitimacy to your name and company. Taking this step shows just how much your business means to you and that you take this aspect of your life seriously.
It will create new opportunities. In some cases, incorporation is required. For example, if you would like to conduct business with the government or a non-profit organization, you’re legally required to be incorporated.