Among the many decisions that you are required to make as a new business owner, one of the biggest is the choice whether or not to incorporate. Incorporating your business isn’t completely necessary, but it is fitting in certain situations. Most business owners start out as a sole proprietorship or partnership and that suits their needs just fine; but business incorporation can still be an option somewhere down the line. The following will help you learn more about this important business decision, as well as help you decide if business incorporation is right for you.
Why Would You Incorporate Your Business?
Incorporating your business provides you with many advantages that you just don’t get as a sole proprietorship or partnership. Here are just a few examples.
Asset Protection: As a sole proprietorship or partnership, your assets are always at risk if you are not incorporated. As a business corporation, any lawsuits filed would be against the corporation; not the individuals who run it. This is by far one of the biggest advantages of incorporating your business.
Establishes Your Reputation: Having that ‘Inc’ after your business name lends you instant credibility in the eyes of vendors, investors and consumers. Speaking of the latter, many customers prefer to only do business with corporations when given the choice, as they feel that their money will be safer and better spent. Which camp do you want to fall within?
Protect Your Business Name: Many states have restrictions that say that no two businesses can have the same name. This falls in your favor if you want to protect your business name at all costs. By incorporating your business and by giving it a specific name, you will lock that particular name down for as long as your business remains incorporated with that state.
The Business Can Continue to Grow and Prosper: Sole proprietorships and partnerships only exist as long as their owners are still alive. When their owners die, the businesses die right along with them. This isn’t the case with business incorporation.
Incorporating your business means that shares will be sold and that ownership can change hands as quickly as the deal can be made. If you hope for your business idea to live on well into the future, even after you’re gone, incorporating your business is definitely the way to go.
Tax Advantages: As a corporation, you have much more flexibility and many more deductible options than are afforded to sole proprietors and partners. You may actually find tax time a tad bit easier to handle after incorporation than it ever was as a sole proprietor or partner.
How to Incorporate Your Business
Now that you know the benefits of incorporating your business, and you still think that the move is right for you, let’s discuss how to actually go about it. There are essentially three available paths on the way to business incorporation. Consider them carefully and choose the one that fits your needs and budget the best.
Do It Yourself: Your state should have a website that includes all the necessary information for incorporating your business. You will need to fill out an immense amount of paperwork and pay the proper fees, but this always one option for the DIYers.
Paying a Service: Have you ever seen those commercials for Legal Zoom, a company that helps you traverse many legal troubles on your own with lawyer-assisted help? This is a good example of a service that will make incorporating your business an incredibly simple affair.
Hiring an Attorney: Of course, if you want the easiest path to business incorporation – even though it’s typically the most expensive – you can hire an attorney to do the job for you. An attorney will fill out all the required paperwork, will talk to all the right people and will make sure that you are operating well within the law.
As you can see, each path holds its own unique benefits and downsides. If you are prepared to incorporate your business, simply choose one and get started. If you are short on cash, doing it yourself may prove to be the best option. If you have a little bit more money to spend, an incorporation service may suffice; and if you have tons of capital to work with, a lawyer may be the best move to take.
Regardless of how you go about it, incorporating your business definitely has its perks. Take this advice, put it into action and watch your business transform into a corporation well on its way to success.