The recipes of a successful business are hard work and a little luck. Knowledge is of the essence if you want to continue being successful when creating your business. Among the factors that business owners will consider the most are customer service, location, decor and hiring employees. Deciding on the best business structures such as partnership and corporation among many others is what business owners fail to put attention to. Several entrepreneurs do not know that the business forms that they choose could be the cause of failure or success. It is essential for business owners to select the best business forms in order to survive the competitive market. A successful business is one that the owner has chosen the proper corporate form of business. Here are the reasons why you need to incorporate your business.
Business longevity. Business incorporation is a way to make sure that you and your business are separate from each other. With regards to other legal forms of businesses, this is not the situation. Sole proprietorships do not have longevity because if something happens to the owner, the business will not survive. A corporation has the possibility of longevity because it is a separate legal entity. You can write down a succession plan for your business to be inherited if something happens to the owner.
You will get lower tax rates. When a sole proprietor makes a profit, they get taxed at the full rate. However, incorporating your business will provide you with the benefit of paying taxes at a lower rate for the income that you have generated annually. Incorporation comes into play as an aspect of profit strategy.
Incorporation will assist you in dealing with your losses. Depending on the legal form of business that you have picked out, there is no taxation in situations where the business suffers a loss. Nonetheless, every legal form of business has its own way of dealing with losses. In a sole proprietorship that is not incorporated, it is impossible to postpone losses from one year to the other. This can be done in a corporation. If you suffer losses at the beginning of the year, they can be piled up and applied on future incomes.
You will not find a difficult time accessing capital. Corporations have shares of stock which they can offer and therefore it is not difficult for them to raise capital. Your business will be able to grow and develop without difficulties. Corporations, in general, have access to various sources of capital. Incorporated businesses have a higher chance of being given money by banks as opposed to unincorporated businesses.