If you are about to start a small business, you have some major decisions to make. One of those decisions will have to be whether or not you should incorporate your business.
As in any business decision you will ever make, there are pros and cons. Determining the structure of your company will have long-term ramifications, so it’s a good idea to do your homework and hire a professional help to make certain you are doing everything properly.
When deciding whether or not to incorporate, the Small Business Administration has a handy check list that can be used that can help to determine what your next step should be.
Some questions to ask:
—How large do you envision your business getting? Do you have dreams of employees and a payroll, or is this going to be limited to a family-run operation?
—How much control do you want to have over the business?
—Do you want to leave yourself or your business open to lawsuits?
—What are the tax implications of your decision?
—What do you expect the profit or losses to be?
—Will you need to re-invest your earnings into the business?
—Do you need to have the ability to cash out of the business down the road?
Once you answer these questions you’ll have a better idea of whether or not you want sole proprietorship or a corporation.
Most small businesses begin their lives as sole proprietorships. This means these businesses are owned by one person, who usually is in charge of the day-to-day operations of the business. The business owner owns the business and the profits—and losses—generated by it.
Legally, in a sole proprietorship, there is no difference between you as an individual and your businesses. The advantages of such an arrangement include ease of organization and total control of every aspect of your business. That includes everything from dissolving the business to filing taxes.
One of the largest disadvantages to not incorporating is that the business owner, and not the business itself, is liable and legally responsible for all debts, which puts personal assets at risk.
Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.
On the other hand, the incorporated business is legally a separate entity from the business owner, making personal assets untouchable in legal matters or bankruptcy. Corporations also have distinct tax advantages, as well.
There are some downsides to incorporating. It can be expensive and time consuming, depending on how you go about it. Several online firms now offer this service, so it’s a good thing to shop around. Also, once your business is incorporated, you are subject to state and federal regulations and all the paperwork that entails. And while there are some tax advantages to being incorporated, doing so may actually increase your tax load.
If you are deciding whether to incorporate, weigh the good with the bad. That way you’ll be able to make an educated decision and spend your money wisely.
Popularity: 24% [?]


















Hello.
I like your site and wanted to know if you would be interested in exchanging blogroll links.
Thanks in advance