Owning a business can be very lucrative but you need to take proactive measures to safeguard everything you have worked to build. One way to protect yourself is by incorporating your current business, whether you are running a sole proprietorship or are a partnership it would be advantageous to incorporate.
Reasons to Consider Incorporation
The primary benefit of incorporating is you are able to protect your personal assets in the event the corporation goes out of business or is sued. Since the corporation is a separate legal entity it can own property and has to pay its own taxes. By separating your assets from the corporation, it will give you a greater degree of protection.
Another benefit that is associated with incorporation is that other businesses and institutions will take you more seriously when negotiating contracts. As a sole proprietor, you are solely responsible for your business and assume all of the risks, however, an incorporated business will give off the impression that there are multiple people within the organization so it is more structured than the “one man show” stigma that is associated with a sole proprietorship.
There are some small business owners that think the cost of incorporation is too high and not worth the investment for their small business. That mindset is potentially dangerous since every business should incorporate. The costs are minimal when compared to the benefits. While the tax rate for an incorporated business is higher in some cases than a sole proprietorship the benefit is that you may be eligible to participate in government programs that are geared towards small businesses. No matter how small your business is at the moment you should seriously consider incorporating it as soon as possible, you will have peace of mind knowing your personal assets are protected in the event something happens to your business.