Tips
Advantages of Incorporating
- Reduces Personal Liability
Incorporating helps separate a person's identity from that of this or her business. Insurance may still be necessary, but incorporation contributes an added layer of protection. - Tax Advantages
Careful planning of entity type can result in lower overall tax rates. - Can Reduce Likelihood of an IRS Audit
IRS Form 1040, Schedule C (Profit or Loss from a Business), particularly those with higher gross income levels, are the target of many IRS Audits. Incorporated businesses with similar income levels have a much lower audit rate. - Anonymity
The Corporation can be established In such a way that shareholders/owners, remain anonymous. Often this same anonymity can be accomplished for officers and directors. - Adds Credibility
A corporate structure communicates permanence and credibility. Even a company with only one stockholder and employee may be perceived as a much larger and more credible upon incorporation: - Easier Access to Capital Funding
Capital may be easier to access using a corporation through the sale of stock. When a business is structured as a sole proprietorship or partnership, investors are much harder-to attract because of the personal Liability. - Easier Transfer of Ownership
Ownership of a corporation may be transferred, without substantially disrupting operations or the need for complex legal documentation, through the sale of stock.
This information is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, consult with your professional advisor.
