Why Incorporate
A Business?
Benefits of Incorporation.
Why Incorporate? - Most businesses will benefit from
operating under a corporate business form.
1. The primary benefit of incorporating
is to protect your personal assets from potential
liabilities that could occur in your business. Without
the protection provided by a corporation, creditors
or other claimants of your business can attach personal
assets including garnishment of personal salary, attachment
of personal bank accounts, attachment of your home
in most states, and seizure of other personal assets,.
If you are operating as a sole proprietorship or as
a partnership your personal assets are vulnerable.
By forming a corporation and following all corporate
formalities, you insulate yourself from personal liability.
The only amount you have at risk is property and investment
that you put into the corporation.
2. Another benefit incorporation is
that it offers continuity of existence. A corporation
is a separate legal entity that has a separate "life"
from its individual owners. Upon the death or retirement
of an owner, the corporate entity can continue on.
Shares of ownership may transfer upon death or by
sale. But the business entity will continue in existence
until it is dissolved.
3. It is next to impossible to raise
capital investment through a sole proprietorship or
partnership. If your business is considering investment
capital, it is necessary to do so through a separate
legal entity. Investors tend to shy away from partnership
investments because of a risk that their personal
assets will be subject to the liabilities that may
arise from the business in which they are investing.
4. There are also potential tax advantages
to operating through a corporation which you may wish
to discuss with your accountant.
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