If you have ever dreamt of being financially independent, then you’ve probably thought of starting your own business. People who dream to set up their own business might be focused only on things like sales, operations, employees. But before doing all that, you need to set up your business legally and properly. The usual forms of businesses are sole proprietorship, general partnership, corporation, and limited liability company (LLC). Business incorporation has numerous advantages to any investor and should be undertaken while filling up papers to set up your business.
Pros of Being Incorporated
- By incorporating your company, you effectively separate yourself from the companies’ liabilities.
- Corporations theoretically have an unlimited life.
- It also allows you to transfer ownership to a new party quickly.
- As a limited business, you enjoy a lower tax rate when compared to personal income tax.
- Easily raise capital for growth by the issuing and selling of company shares.
Cons of Incorporation
- Formalities: corporations require certain formalities, such as having annual meetings.
- Corporations have a higher set-up fee compared to partnerships.
- Paperwork. They require regular filling of paperwork as well as fees.
How to Incorporate a Business
- Check to see if your business will benefit from business incorporation
- Appoint the members of the board
- Allocate the shareholders
- Select between filling a C corporation and an S corporation
- Get yourself a corporate lawyer
Once the business has been incorporated, you need to ensure that you strictly follow the rules and regulations which govern your incorporation. This includes ensuring that all the necessary paperwork is properly filed, indicating the separation of the business and self. When you fail to do this, you may be setting yourself up for lawsuits since you’re liable for the business dealings.
These are just some of the things to consider about business incorporation. It’s best to get a local attorney to ensure you are making the best decision for your business and going about it properly.