Incorporating small businesses can be a huge decision to make. Perhaps you have just set up shop and are doing remarkably well so for or, perhaps your small business is struggling to get off the ground. Either way, choosing to incorporate your business is perhaps the best decision you will ever make, and contrary to popular opinion, incorporation is not reserved for well established enterprises only. There are many benefits to incorporating your business, all of which should be fully aware of before making your next move. Here are some advantages your business is bound to gain through incorporation.
Through incorporation, you can effectively protect personal assets from creditors. Starting your own business is definitely an exciting experience however, underneath that excitement is the harsh reality that accidents in business sometimes happen, causing businesses to fail. This is where the advantage of incorporation comes into play, since by incorporating your business as a corporation or limited liability company, you effectively protect your personal assets from business debts. Therefore, this implies that any personal property you own is off-limits to collection agencies if your business happens to run into hard times. People running businesses without incorporating them have personal assets e.g. homes, cars, investment accounts and assets obtainable in future etc. linked to the business. Also, if such people ever declared bankruptcy within their business, their personal assets would be liable to be used for debt repayment. If such people filed for personal bankruptcy, their business would likewise be an asset liable for liquidation to repay debts. Through incorporation, businesses and personal assets can be protected since the business owner becomes a separate entity from the business itself.
Through incorporation, businesses can raise capital much easier. This may not be among the most obvious reasons for incorporating a business, however, it is true that through incorporation businesses can raise capital far much easier. Basically, this implies that if you ever intend to apply for a long or borrow money, it improves your chances by legitimizing your business. Incorporation also enables businesses to open up bank accounts and start building their lines of credit, which is necessary for small business owners.
Incorporation makes selling businesses much easier. No matter how attached someone can be to their business, there reaches a point where they too decide to sell it. As difficult as it may be to envision that at the moment, it is always imperative to prepare for the future, since traditionally partnerships and sole proprietorships are less attractive to buyers. Therefore, by incorporating your business you create a competitive edge since you can attract more buyers.