Okay, so you’ve started your own business! Great! You have also probably heard a lot of people telling you that you should probably protect yourself by forming a corporation. Why is this important? Check out the following five great reasons to incorporate your business!
1. Asset Protection
The number one reason to incorporate your business is to protect your own personal assets. This works because a corporation can buy things, sell things, own property (ie: houses, work truck, equipment, etc.) it can sue and can even be sued!
If your company were to be sued and you were not incorporated, you could lose all of your personal property, cars, savings etc. If you ran your business as a corporation they can only get what the corporation owns.
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2. Building Corporate Credit
Once you incorporate your business you can go after corporate credit. Corporate credit is great because it builds so fast. Personal credit may take years to build to a respectable level. Corporate credit takes about a third of the time to build. Since it builds as its own credit profile, it keeps your personal credit separate.
A lot of business owners want to fly under the radar. They want to run their business and not have their personal information plastered all over the web for all to see. When you incorporate your business in certain states such as Delaware this can be possible as they do not record officer information.
4. Legitimize Your Business
Most people view a corporation as a more legitimate company and therefore more stable. It may help when setting up vendor accounts or securing bank loans for equipment and supplies. When you incorporate your business, it may give you that extra image boost you need to obtain that loan or trade account.
5. Raising Capital
A corporation by definition must be able to issue stock. This makes it possible to raise capital by the sale of stock. Many start up businesses need to raise large amounts of working capital to make their dream a reality. Often times the business will do this by pitching it’s plan investors.
Should You Incorporate Your Business?
Every business is different and there is no “one size fits all” business structure. A corporation is a great business entity with a lot of great benefits. While a corporation can be the best fit for most business’s out there. You may want to consult an attorney prior to attempting to incorporate your business. Once you know exactly what you want your new entity to be let us know. We will be happy to help!