There are so many benefits that emanates from incorporating a business. This is a fundamental way to separate your business life from your personal life. This article pinpoints the tremendous advantages of incorporating your company.
the first advantage that emanates from incorporating your company is business longevity. In this life, you will always have a limited lifespan and a time will come for you to depart from this life. You need to abhor having a sole proprietorship as it will eventually die the moment you die. As a result of company incorporation, you will always have a way to have another person succeed your business and live long after your death.
The other fundamental merit for incorporating your company is the limited liability. The only way you will enjoy and benefit from limited liability is where your personal life and business life are parallel. This means that all your company’s debts remain company debts and you will never be responsible. Where your company is sued or even files bankruptcy, you will never be affected personally whatsoever.
With company incorporation, you are assured of enjoying lower tax rates. You will not be subjected to full tax rates like a sole proprietor. This is always a benefit for your company and yourself as you are only to pay low tax rates on a yearly basis.
Where your company is incorporated, you will always benefit from tax deferrals. Whenever you have an incorporated company, you are always taxed on your income and nothing more. This means that you are not taxed for the money that you haven’t earned or that hasn’t been sent to your account. Thus, you could have an option of avoiding taking your income from the company and this will help you avoid being taxed. This is never the case with a sole proprietorship where you are taxed on the profit acquired for the business.
Losses are part and parcel of companies and businesses and whenever your company incurs losses, you will never be allowed to tax. Businesses like sole proprietorship will never have a chance to carry their losses forward to another fiscal year. Nonetheless, you will always benefit from sharing your losses with other fiscal years where your company is incorporated.
Finally, where you have incorporated your company, you will have multiple payment options. For example, you are the one to decide whether your stakeholders are to be paid as salaries or dividends. Whether you settle for salary or dividend, you will be benefiting. The salary that you would be paying your family members could be accounted for as company expenses. There are other instances where you could have yourself and your family members as stakeholders and earn your salaries through dividends which are taxed at low rates.
There are multiple and tremendous benefits of company incorporation. The above are just a few of the benefits. Thus, you are to make up your mind and make plans for incorporating your business where you eye to experience the above benefits.