Benefits of Incorporating a Business

Incorporating a business can provide many excellent benefits to a small business owner.

When incorporating a business, you first have to decide which type of entity is right for your situation: a c corporation, s corporation or llc. Click here for a side-by-side comparison chart of all three types of entities.

Regardless of which entity you choose, you will still enjoy benefits such as:

*No personal liability for the obligations and debts of the business.

Just incorporating a business doesn’t automatically mean you won’t have personal liability. You must run your corporation or llc like a business, not co-mingle your personal and business funds, and not engage in criminal acts in order to maintain the shield of personal liability. Therefore, creditors of a corporation can seek payment from the assets of a corporation, but not the assets of its shareholders.

By incorporating a business you generally can limit your potential loss to whatever you've invested in the business and/or the businesses assets.

*Incorporating a business promotes a professional and credible image. Potential customers know you’re a “real” business.

Tax advantages of incorporating a business:

Corporate profits aren’t subject to Social Security, Medicare, workers’ compensation, and other taxes (aka “self-employment taxes), which adds up to 15.3 percent in taxes. A sole proprietor would pay all of these self-employment taxes on all income earned by the business. With corporations, only the salaries of the employees are subject to self-employment taxes.

Incorporating a business also means that your corporation can deduct business operating and capital losses with more ease than a sole proprietor can.

Incorporating a business can also help your retirement plans. A corporation can set up a 401(k) that would allow the owner to put in a higher amount of income than just a standard IRA would (you can put in the employee contribution and the employer contribution).

Let Click&Inc make incorporating a business in any state easy, affordable, and the first great decision you make as CEO.