It’s not uncommon for sole proprietors and small business owners to question the need to incorporate (i.e. create a legal entity for) their business. Incorporation costs money, can create tax implications, comes with additional obligations and may require a call to your corporate attorney.
However, I would encourage all business owners to consider the potential benefits of incorporation, including:
Protection of Personal Assets: Your business’s legal entity will be able to enter into contracts, own assets, earn income, open bank accounts, apply for credit cards, incur debt, etc. While there may be exceptions to this, your personal assets as a business owner are generally protected if any issues arise with your business and your business is operating through a legal entity.
Tax Benefits: Depending on the legal entity you choose for your business (i.e. corporation, limited liability company, limited partnership, etc.), you and your business may receive certain tax benefits. Your accountant (if your business doesn’t work with an accountant, we highly recommend you do so) can provide additional guidance on the specific tax benefits your business can unlock by incorporating as a certain legal entity.
More Access to Capital: If you are seeking a bank loan, seed funding for your business or other sources of capital, you may have faster and increased access to such capital if you have incorporated your business. Banks and other investors may be more likely to provide capital to a business that is protected through incorporation.
Increased Credibility: Incorporating your business may help your business establish more credibility and elicit more trust from your customers, vendors and other partners, as incorporation can signal a sense of stability, growth and permanence for your business.
Build a Relationship with a Corporate Attorney: Engaging a corporate attorney to help you with the incorporation process can lead to a long-standing relationship with your attorney, and that attorney can help you identify the nuances and legal obligations of your business. This kind of partnership will allow you and your attorney to work together to protect your business and help it grow into the future!
Please contact Serna Legal Services at 312-601-9859 or info@sernalegalservices.com if you’d like to learn more about why and how to incorporate your business and whether that option is right for you. Remember that with Serna Legal Services, your business will ¡Celebra!
This content is published by Serna Legal Services, LLC and is available for informational purposes only and is not considered legal advice on any subject matter. By viewing this content, the reader understands there is no attorney-client relationship between the reader and the publisher. The content should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation.