- Paperwork. Corporations need to file Articles of Incorporation, corporate minutes, bylaws, and other paperwork regularly.
- Money. Incorporating isn’t a cheap process. Thus if you’re just starting out in business and money is an issue, bear in mind that there are costs you need to pay. That includes attorney fees, state filing fees, franchise tax, and other government-imposed fees.
- More taxes. When you’re in a business corporation, you need to file a separate tax for your company and personal tax. Thus, you can’t file any personal tax credits on your business tax form. Also, business losses will only apply to the company.
There are far many advantages to incorporating and there are several types of incorporation. Business owners will choose a type solely to protect them and the stockholders from any personal liabilities against business debts or lawsuits. Each type or form has its individual pros and cons based on taxation, administrative overhead, and organization.
Pros of Incorporating
- Investors. If you want to raise capital for your business through selling company stocks, incorporation is necessary. You’ll also need to form a corporation if you are going public.
- Perpetual existence. A corporation will still thrive even if the owner dies or sells off the company.
- Credibility. Most clients or customers find corporations more credible. Thus, you’ll likely attract more stockholders, partners, and customers, as well as gain more attention from the community.
- Separate liabilities. As mentioned above, the assets and liabilities of a corporation are separate from its owners and stockholders. That means, in the event of debts and lawsuits, owners and shareholders aren’t personally liable.
- Taxes. Your taxes depend on your company’s corporate structure. You can choose to have pass-through taxation, or you can avoid double taxation.
Whether you choose to incorporate your business or not, it mostly depends on your capital and your decision to sell shares. The best thing about this is that your personal assets are protected. Thus, if your company goes bankrupt, your personal assets won’t get affected.
While it’s important to protect your assets at all costs, making your business last long is equally important. This can be made possible by protecting it with business insurance.
Sungate Insurance Agency aims to meet the needs of your business by offering you a comprehensive business insurance coverage that protects your interests. Talk to one of our agents now! Call us at (407) 878-7979 or visit us today and get a business insurance quote from us for free!