Why Incorporate Your Business

Protection of Personal Assets

The main reason business owners incorporate is to protect their personal assets. When a corporation or LLC is operated and maintained properly the owners can not be held personally liable for it’s debts or liabilities. This means that the owners personal assets are protected and they will not be required to settle any corporate debt or court judgments against the company with their own money.

For example if the business does not succeed or goes bankrupt creditors can not force you to use personal assets such as your home, car and financial accounts to settle any corporate debts.

Sole proprietorships and partnerships offer no such liability protection leaving the owners personally responsible for satisfying any business debts.

Gain Tax Advantages

Corporations and LLCs enjoy certain tax advantages that are not given to sole proprietorships and partnerships. For instance corporations can fully deduct premiums paid for medical, life and disability insurance.

Raise Capital

Another advantage of a corporation is that it can raise capital by selling shares of stock which makes it easier attract investors. In a sole proprietorship or partnership operating capital usually comes directly from the owners.

Establish Credibility

Incorporating your business can help you establish credibility with customers and suppliers as well as financial institutions.