Top 5 Reasons to Incorporate Your Business


Starting a business is the easy part. Keeping your business going and growing is by far the more challenging. There are so many decisions to make, and it’s easy to get overwhelmed.

One of the best decisions you can make is to incorporate your business. It’s not something that needs to be done right out of the gate, but it’s something you should seriously consider as your business grows.

What is the benefit of incorporating your business lately? Why is it becoming a popular option for budding entrepreneurs?

Check out this article to learn five reasons to incorporate your business.

1. Limited Liability Protection

Limited liability protection is the main reason why incorporating a business is so recommended. Limited liability protection limits the personal risks business owners face if their business is sued or goes into debt.

Incorporating your business gives you the power to set up a separate entity from yourself. If your business is incorporated, personal liability for business-related debts and obligations is limited to the assets owned by the company. 

Incorporating your business means your personal assets are not exposed to creditors or legal proceedings. Incorporating your business allows you to better manage risks — like leases, contracts, and leases that may put your personal finances in a vulnerable position if something goes wrong.

2. Credibility and Professionalism

Incorporation demonstrates to clients, vendors, and others that your business is a serious operation with sound financial and operational practices. Incorporation allows your business to receive an official name. This of which gives your business more perceived credibility and legitimacy that non-incorporated businesses may not have.

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3. Tax Advantages and Deductions

Corporate taxation is generally lower than the taxes paid by sole proprietors and partnerships. Corporations also benefit from extra deductions. This includes the cost of goods sold and advertisement expenses. 

The profits of a corporation are taxed at a lower rate than personal earnings. This means that the corporation can retain a larger portion of its profits. But if you want to maximize tax deductions, make sure to be aware of the best state to incorporate.

4. Easier Access to Raising Capital

As an incorporated business, you have a greater ability to secure financing from lenders than a business that is not incorporated. This is due to the greater legal protection and financial stability of a corporation. A corporation may be able to obtain debt financing from banks or raise capital by issuing stocks or bonds to investors.

5. Succession and Continuity Planning

Incorporating a business sets up a structure that makes it easier to pass ownership on to a new business owner in the event of death, illness, retirement, or other changes in personal circumstances. It provides legal protection for:

  • shareholders
  • directors
  • officers

Incorporating can help ensure the continuity of the business, should something unexpected happen. By laying out a plan to govern the future of the company, you can provide the stability necessary for long-term success.

Know Why You Should Incorporate Your Business

Incorporating your business can open up opportunities and advantages that you may have otherwise overlooked. Whatever the reason for doing so, you can be sure to benefit from the many advantages listed in this article.

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Once you decide to incorporate your business, researching all the options and their impact on your business is the key to success. So what are you waiting for? Get started today!

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