Converting your business from a sole proprietorship to a corporation might seem daunting or unnecessary at first glance. However, the protection you will gain and the money you will save greatly outweighs the extra paperwork you may have to file. The business form you choose could ultimately make or break your success in the marketplace. Incorporating has numerous benefits that can impact your future. Here are a few:
1) Personal Asset Protection
This is perhaps the biggest reason to consider incorporating your business. If you operate as a sole proprietor or partnership, your personal assets are liable for business debts or lawsuits. This means that if a client or customer brings a successful lawsuit against you, or your company loses money or goes into debt, your personal finances, home, car and anything else you own could be in danger. If your business is incorporated, it becomes its own legal entity. This translates to limited liability: you are only responsible for your personal investment in a company. This can easily be one of the most attractive reasons to consider incorporating, because it eliminates some personal risk. If something goes wrong with your business, your personal holdings and valuables would still be kept safe.
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