Choose What’s Best for Your Business among the Incorporation Forms

2007-03-08 10:33:40

( Business )



When you need to protect your personal assets, incorporating your business establishment is usually the last thing on your mind. But this may be the only thing in the future that will keep you off from the streets due to a bad turn in your business.

There are reasons behind incorporating your business establishment. Incorporating your business sets it up as a separate entity from yourself. This means that when your business goes bankrupt, you and your personal assets, such as your home, your car and your personal savings accounts, do not go down as well.

One other advantage to incorporating a company is the fact that it helps you save money on taxes. As a sole proprietor of your business, you are required to pay a hefty percentage of all your company’s profits as a self employment tax. On the other hand, if your business establishment were registered as a corporation, the only self employment tax you would have to pay would be the income that you give to yourself. Additional expenditures such as medical and childcare costs would also be deferred. This is generally not possible if you were the sole proprietor of your business.

The decision to incorporate does not end there however. Various incorporation forms abound and each has their own distinct advantages. You would then have to decide on which among the incorporation forms you will use for your particular business. The different incorporation forms are the LLC or limited liability Company, C Corporation, and S Corporation. These incorporation forms differ in ownership rules, personal liability, tax treatment, documents needed, capital contributions and business management.

Choose well among the incorporation forms as the type you will choose will determine the long term growth of your company. It will determine who holds the controls of your company and the method of raising additional money for expansion.

Lastly, there are many companies online that offer incorporation services which will guide you on how to incorporate your company as well as assist you on getting through the next step of growth for your business. So learn more and prosper more.


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