Things you should know about incorporating a business
Do you plan to incorporate your business this year? There are plenty of reasons you should, including protection of your personal assets. But here are five things you likely don’t know about incorporating a business that you should know.
1. You Don’t Need a Lawyer
Don’t be fooled into thinking that filing paperwork for a corporation is over your head, and that it requires the assistance of a lawyer. It’s not complicated at all. You can fill out the paperwork found on your state’s Secretary of State website yourself, or you can hire an affordable business filing company to expedite it. The most you’ll spend is a few hundred dollars, not thousands!
2. The S Corp is the Most Popular Corporation for Small Biz
There are actually several types of corporations, but by far, the most common is the S corp. It provides plenty of tax benefits, including what’s called “pass through” tax treatment, where your corporation’s profits and losses are passed down to your personal tax statement. An S corp can have up to 100 shareholders, so if you plan for more, look at other types of corporations.
3. If You’re a Solopreneur, You Only Need One Board Member
When you incorporate, you’re required to list your Board of Directors. If you’re a one-wo/man show and have put off incorporating because you’re the only person in your business, don’t sweat it. You can be the entire Board. You’re only required to have one member, so it’s all you!
4. People Take You More Seriously
You’d be surprised what a difference adding “Inc.” to the end of your business name can make. This is especially true for freelancers, who people tend to think aren’t as serious about their businesses (chalk it up to too many bad experiences with freelance web designers). Incorporating shows good faith that you plan on being in business a long time, and that others can trust you.
5. A Corporation Lasts Forever
There’s no end of life for a corporation — unless you dissolve it. You can pass your corporation on to future generations in your family, or you can sell it to new owners. If you operate as a sole proprietor, your business ends when you die. Corporations, on the other hand, protect the business in case of any fatality.
What are you waiting for? You see there are plenty of good reasons to incorporate your business this year, so get a move on!