Lots of business owners do not know the essence of turning their small businesses into a corporation, and for that reason, I am going to reveal to you the 4 Benefits of starting your own corporation, safe to say, turning your small business into a corporation.
But before we check out those 4 Benefits let us first of all see the definition of a corporation.
What is a corporation?
A corporation is simply a group of companies that are given the authority by the law to act as a single entity.
This means that as a small business owner, you can operate under the umbrella of several other businesses; and in so doing avoid your business crashing unannounced.
Get a pictures from this illustration.
Jim’s company is a sole proprietorship eatery business, that oversees company workers eating; almost their 3 square meals everyday.
Business keeps booming until 3 customers are hospitalized as a result of food poisoning after eating in Jim’s restaurant.
Now Jim is standing trial for attempted murder against the construction company, and all the other workers are no longer eating in Jim’s restaurant again.
If Bill had his business incorporated, he would have had an additional layer of protection.
Incorporating your business is capable of reducing disasters, while sole proprietorship are exposed to liability risk.
Depending on the needs of your business and your personal life, starting your own corporation will vary extensively; but you need to consider the following 4 benefits of starting your own corporation.
4 benefits of starting your own corporation.
A corporation will always exist as a separate legal entity apart from your personal life.
If any debts or lawsuits arises, it is the company that will incur them all, and not the owner.
In the case of bank financing, banks will require business owners to sign a personal guarantee.
If your business has a potential for lawsuit, make sure you consult a lawyer and incorporate your business.
The second benefit of starting your own corporation is company taxation.
Corporations have better taxable benefit, and they are generally taxed at a lower rate.
Trying to finance a sole proprietorship is often very difficult.
Where as a corporation is capable of selling shares of the company and easily raise money than other business structure types.
Selling your business
A business that is not incorporated will always find it hard to evaluate their property.
But a business that is corporates will have its value based on the business and not the owner, and this will make it easy to sell the company.
Starting your own corporation can seem costly and time consuming than any other business type.
Make sure you consult your accountant and lawyer to advise you on all you need to do before incorporating your business
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