When you start a business, there are lots of things to decide. One decision you will have to make early on is your business type or structure. While there are different options to choose from, one that works well for many people is incorporation. A corporation is said to exist when the business itself is considered separate from the individuals or organizations that own it. This structure may not work for every business or in every situation, but it can work for some. When it does, the benefits are numerous, which is why you should at least consider forming a corporation.
Protect Your Property
One of the best things about forming your business as a corporation is the protection that this choice can provide. Since your business is separate, you and your property are protected in the event that the business owes large debts.
With other business structures, it may be possible to seize your assets to pay the debts of a business you are connected to. Fortunately, this is not the case when you form a corporation.
Another nice thing about incorporation is that it makes for easy transferral of ownership.
If you decide you no longer want to own your business, you can sell it by selling stock. You can also invite other people to become shareholders in your business in this way.
Enjoy Tax Breaks
In many cases, corporations will enjoy certain tax breaks that are not available to businesses with different structures.
For example, shareholders are not required to pay self-employment tax as individuals. They may also qualify for deductions, such as health insurance premium costs.
Of course, the best way to discover and take advantage of all of the tax-related benefits is to work with a qualified tax professional. But, if you can do that, chances are that you will save quite a bit.
Benefit From Legal Protections
Being sued is a business owner's worst fear. However, forming a corporation can make any unavoidable litigation less intimidating.
This is because the business entity, rather than the individual owners, would have lawsuits brought against it. Furthermore, corporations can also start litigation of their own, which can be helpful in protecting privacy.
Ultimately, forming a corporation makes a lot of sense for many professionals. If you choose to go this route, be aware that there are different types of corporations that you can form. With some research, however, it should be easy to choose the right one for your business, your goals, and your needs.