| If you're considering turning your small business into a | | | | its own, it is similar to person, which means it can be |
| corporation, there are certain benefits to expect when | | | | sued or sue another. The shareholders are not held |
| it comes to taxes, liability, and company operations. | | | | responsible for the corporation's obligations and debts. |
| Though incorporation isn't the answer for every | | | | In a sole proprietorship or partnership, you could lose |
| business, it's good to be familiar with the benefits from | | | | everything you have (including your home and personal |
| the start so you can maximize your company's | | | | assets) if a lawsuit is filed against your company. |
| potential for future growth. | | | | Corporations Live On |
| Incorporate Your Business for Possible Tax | | | | After you've retired or passed on, your corporation will |
| Advantages | | | | still exist for another to continue the business. This is |
| Tax benefits are the main reason many companies | | | | possible because a corporation doesn't rely on one or |
| decide to incorporate. A corporation enables you to | | | | two persons to be an operating business. It is a |
| accumulate your wealth and assets with special tax | | | | separate legal entity that can be operated by a group |
| rates meant for corporations. These rates are a bit | | | | of shareholders and board of directors. |
| lower than tax rates for individuals. Also, when you | | | | Financial Benefits |
| own a small business and do not incorporate the | | | | When you incorporate, you give your company the |
| business, you must pay self-employment taxes | | | | ability to grow financially. It's much easier to raise |
| (including social security tax) along with regular income | | | | money for a corporation, and shareholders can help |
| tax, either quarterly or in one lump sum. Operating as a | | | | make things possible that you as an individual cannot |
| corporation enables you to set up a payroll structure | | | | accomplish on your own. The business will have more |
| similar to working for someone else, where these | | | | opportunity to grow and become a great success as |
| taxes are taken out of your paycheck little by little on | | | | a corporation. |
| a regular basis. | | | | Forming an LLC |
| Corporations are able to deduct many operating | | | | Even when considering all the benefits of incorporating, |
| expenses without restriction. They can also split | | | | you might still be hesitant about this decision. Forming |
| income with shareholders, a process that often lowers | | | | an LLC (Limited-Liability Company) is another option. |
| the overall tax bracket for the corporation. The term | | | | When you form an LLC, you are creating a legal entity |
| for this is called "shifting." Corporations are also less | | | | for your business just as with a corporation. You are |
| susceptible to IRS audits whereas sole proprietors are | | | | not legally liable for your company's debts, but the tax |
| targeted frequently for audits. | | | | requirements are different than those of a corporation. |
| Corporation Benefits for Employees | | | | Be sure to study the differences between the two |
| When you incorporate your business, you may receive | | | | before making a decision. LLC formation might be the |
| tax-free benefits as an employee such as medical | | | | right avenue for your small business. |
| insurance, life insurance, a retirement plan, education, | | | | If you feel it will benefit your business to incorporate, |
| work-related travel, and client or employee | | | | you can check out great resources on the Web to |
| entertainment. Most states allow for these benefits | | | | help the process go smoother. There are many |
| even if your corporation only has one employee. | | | | websites that enable you to incorporate online and |
| Liability Benefits | | | | provide helpful tools so you can start enjoying |
| Liability is another major benefit of forming a | | | | corporate benefits in no time. |
| corporation. Because a corporation is a legal entity of | | | | |