There are many benefits associated with forming a corporation or a limited liability company LLC.
Some of the benefits include:
Limited Liability:
Limit your personal liability for business debts.
o “Sole proprietorships have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk… (In a corporation or LLC on the other hand,) shareholders have limited liability for the corporation’s debts or judgments against the corporations.”
Raising Money:
o “Corporations can raise additional funds through the sale of stock… (Sole proprietorships) may be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.” 1
Tax Benefits:
o There can be numerous tax advantages to organizing an LLC or forming a corporation, some of which include the following:
o “A corporation may deduct the cost of benefits it provides to officers and employees.” 1
o “(S Election) enables compan(ies) to be taxed similar to a partnership” 1
o Talk to your accountant about the tax advantages
Corporate Identity:
o Incorporating your business helps to create a sense of image, credibility, and permanence, making it easier for you to do business.
Gifts of Ownership:
o “You can easily make gifts of shares in your corporation without necessarily giving up management control and, if it's done correctly, without paying gift tax.” 3
Selling Your Business:
o “A non-corporate business is hard to valuate properly. A business corporation’s value will be based on the business, not the owner, therefore making it easy to sell the company.” 4
o “Whether you seek protection of your assets; plan to expand your business; or seek tax breaks, the benefits of incorporation far surpass the risks of flying solo for many small business owners.” 2
Are you trying to form a new company? We can help!
There are only three things you have to decide:
1. Pick a company type
2. Pick a state
3. Pick options
Once you know what you want, you can incorporate in minutes with our secure order form. If you're having trouble deciding, give us a call for a free consultation.
1 U.S. Small Business Administration
http://www.sba.gov/smallbusinessplanner/plan/getready/Corp_learn_more.html
2 INC Magazine
http://www.inc.com/articles/2004/09/whyincorporate.html
3 NOLO
http://www.nolo.com/article.cfm/pg/4/objectId/B6061AF8-E1FE-43D9-B3117C83BD1CCA82/
4 About.com
http://sbinformation.about.com/cs/ownership1/a/corporation.htm
