What’s the point of incorporating your business? Some people ask why they should incorporate. If it’s so important, then why do people have non-incorporated businesses? How are those businesses running smoothly? There are so many different reasons to be incorporated, but let’s cover two, and these two reasons are, in our eyes, the best reasons to incorporate your business.
Before we go on to explain why we love these reasons, let us give you a brief definition of the what it means to incorporate your business. When you incorporate a business, you are simply making the business a separate legal entity than yourself.
Reduced Taxes
Once you have separated the business from yourself, your business now falls under a different tax category. Corporation tax rates are much lower than individual’s tax rates, so now, you pay less taxes. The tax rates for small business corporations are approximately 15%, which is much lower than the lowest individual tax rates. The highest tax rate on an individual is approximately 52%. If you are falling into that tax bracket, a lot of your money going to someone else. That is not something we are comfortable with and definitely something you should not be happy about. We want you to keep as much of your money as possible.
Limited Liability
Limited liability is the second reason why incorporation might be the road for you. Say one of your products or services causes somebody a loss or damage of any kind; they can go down the lawsuit route. In this situation, if your business was structured as sole proprietorship or a partnership, then there is no limit your liability. This means that in a lawsuit, your house, your car, and all your other personal assets can possibly be taken from you.
When you are structured as corporation or a limited company, then your personal assets are completely protected. Since your company and yourself are two different legal entities, you no longer have to worry if something happens to go wrong, how much of your personal life can be taken from you. Your home, car and whatever else you own is yours and it’s safe. Obviously, this isn’t a license to go about wronging people, but we know all too well that bad things only happen to good people.
If you decide to incorporate, which suffix should you choose? Is incorporated/ Inc. better? Is Limited? Is Corporation/ corp.? All three of them (Incorporated, Limited, Corporation) and their abbreviations (Inc., Ltd, Corp.) mean exactly same thing. Once you have chosen a name, you may want to consider which legal ending (Incorporated, Limited, Corporation, Inc., Ltd, Corp. or their French counterparts) to go with. We can set you up with a corporation. You choose the name and we’ll take care of the rest.