Incorporating a Small Business

Having a self-sufficient business is probably one of the most common of dreams. Even more so incorporating small businesses into big businesses with larger perspectives and larger visions.

If you have a small business there comes a point in time when you will need to make a decision on whether or not you need to incorporate.

Almost every small business starts as a proprietorship or a partnership and as they grow they ponder over the idea of incorporating.

One of the primary advantages of incorporating your business is that it offers limited liability. If a business is under a sole proprietorship the liability of the business is the responsibility of the proprietor. When the same business is incorporated, the responsibility will depend on the amount of stake or share in the company.

Another salient feature of incorporation is that if you have a debt under the name of the corporation you as an individual will not be held responsible for it. With a proprietorship or partnership, a similar debt would have resulted in the seizing of your assets.

The second most important advantage of incorporating your small business is continuance. In comparison to a sole proprietorship a corporation has a larger life span. In fact legally it has an infinite life span.

If the company shareholders leave the company, die or if the ownership changes. A corporation will always exist.

Business is driven by capital and as a corporation it is easier to raise capital. Influx of capital or funds will help the business to develop, grow and bring in more funds. When you incorporate your small business, you are not only able to borrow as a corporation, but you can also sell shares and raise equity capital.

If the key benefits of incorporating are in line with your companies goals you can begin the process of incorporation.

Labels: incorporating, incorporating your small business, small business, your small business

If you own a small business and you wish to protect your assets, and stretch your tax dollar to the fullest then you might wish to consider incorporating your business. Maybe you don't know a lot about how to incorporate your business, or why you should. Perhaps, you'd like to know the history behind the reasons people have incorporated their businesses in the past, or how that relates to the same needs, challenges, and issues of our present time and your particular business.

If so, there is a book that I would highly recommend, and one that I have in my own personal library. Interestingly enough, this book has been on my library shelf for 30-years. And when I was clearing out all the old books, donating some and giving others away, I decided to keep it. Not because I could use this same book today to incorporate a business, I can hire a lawyer to do that.

Rather, because I think the history, and arguments for and against incorporating a small business are discussed at length, and they still play today. The name of the book is;

"How to Incorporate; A Handbook for Entrepreneur and Professionals," by Michael diamond and JL Williams, 1987.

Boy, have things changed since 1987, still much of the philosophy and definitions of course and all the history is the same, but the forms are much different and now there are LLCs which they didn't have at all back then. This book is extremely interesting because it helps us understand the evolution of corporations in America both large and small. The flow of business law is quite interesting in that regard. Indeed, I hope you will please consider this.

Article Source: Lance Winslow

Labels: book review, incorporating your small business, legal book review, your small business

Are you a sole trader wondering whether or not you should incorporate your small business? Hopefully this article will spell out some of the key benefits that you could expect to see from small business incorporation.

Incorporation could be the right step for you if you're planning to grow your business going forward. Incorporation will make it easier for you to attract additional funding, either in the form of capital investment or loan finance. Also, should your business hit financial difficulties in the future, incorporation will give you limited liability protection from the company's debts and liabilities. We'll discuss these benefits more fully below.

Firstly, let's discuss why incorporating your small business makes it easier to raise additional funding for the growth of your company.Incorporation provides your business with a formal share structure, and so the issuing and valuation of shares becomes significantly more straightforward, making it easier to raise funds via additional capital investment.

Incorporation also gives your company increased credibility with the financial institutions and therefore makes it easier to attain additional finance.

Next let's look at the subject of personal liability protection.

When you incorporate your small business, it's status changes to become a totally independent legal entity. As a result, you get personal liability protection from any debts incurred by the business. Once incorporated, as a shareholder you will only be personally liable for the debts of the company up to the amount of equity you invested in the newly formed company.

In other words, the business's creditors will only be eligible to payment of amounts owed from the assets of the incorporated company and not from the personal assets of the shareholders and directors.

Personal liability protection is obviously one of the most attractive benefits of small business incorporation. It effectively removes the risk to your personal assets that comes with being the owner of a small business.

As well as the benefits already mentioned, there may also be tax advantages to incorporating your small business.

Before you decide for sure to start the small business incorporation process, you should always seek professional advice from a qualified financial expert, as individual circumstances are different.

Article Source: Richard Taylor

Labels: advantages of incorporating, advantages of incorporating your small business, incorporating your small business, small business