ABC’s of LLC
There are many reasons why you should incorporate your business. Why it’s beneficial to try and incorporate your small business enterprise. The many advantages of how you form an LLC and limitations of incorporation will depend on the specific type of legal structure that you choose. However, there are a few advantages that basically apply to corporations as well as limited liability companies (LLC):
Minimize Overall Liability
It’s important to note that both business corporations as well as LLCs generally allow the owners (shareholders) to separate and protect their individual assets. Depending of course on the types of businesses. In other words, if you were to try and operate any sort of business as an unincorporated form of sole proprietorship, then you in effect own this business. This means that you will be liable for all of the debts of the business. If the worst were to happen, it is liquidated due to bankruptcy or any other reason. In other words, your assets and the assets of the business are one and the same. And your creditors will be able to gain possession of all your personal assets.
incorporate means Perpetual Existence
In any sort of unincorporated business, such as a sole proprietorship or a partnership, the business entity’s life is basically tied to the life and participation of the sole proprietor or LLC owners. On the other hand, all corporations and LLCs continue to exist because of the LLC operating agreement.
In other words it is very important to incorporate your business. Regardless of any ownership or management changes that may occur from time to time. This is very different from any other tangible asset. In the sense that it has a intangible life of it’s own. In a nutshell, incorporated business entities have their own perpetual existence that is separate and distinct from the existence of its shareholders.
Incorporate means Tax Flexibility
Incorporating your business can save you federal and state income taxes. It can save you money also on federal payroll taxes and franchise tax. For instance, various C corporations are able to provide their employees (this includes both shareholder employees as well as regular employees) with several rich and tax free fringe benefits.
On the other hand, S corporations also allow their shareholders to avoid corporate income tax on their profits. Apart from that, it is also possible for a C corporation to allow its shareholder employees to be able to reduce the overall payroll taxes, including social security and Medicare related taxes.
Once you incorporate your business, you may be able to deduct many of your regular business expenses. Among those business expenses are employee salaries, employment tax for instance. Of course, this is before they may be allocated as income to owners (shareholders).
It’s clear to see that there are many advantages to incorporating a business. However, it is absolutely crucial that you study all the various pros and cons of incorporation. This holds true especially with regard to the specific type of incorporation that may be required.
Choosing a business structure is an important step when starting a business. As a business owner you must carefully consider the options available to you, as well as the benefits and implications of incorporating your small business. At BryteBridge, we can assist you with this process and help determine what structure is best for you.
It is very important that you do it with an registered agent. Our qualified professionals have extensive experience drafting articles of incorporation. They will assist you with any questions or concerns you may have and help you determine what legal structure is best for you. If you are unsure what legal structure to choose, or are wondering what the best option is – incorporation vs. LLC – our service consultants will be happy to assist you. Visit our website or get in touch with us at 1(407)857-9002.