Has your business grown to the point that your profits exceed $100,000, you’re hiring employees, or you’re looking for financing options to expand? All three indicate you should consider incorporation to take advantage of specific legal and financial benefits, including improved business credit.
Moving your business from a sole proprietorship to an incorporated entity can be a turning point in your entrepreneurial journey. Here are five advantages you can expect when you incorporate your business.
1. Legal Protection
One of the main advantages of incorporation is the clear legal separation between your personal and business assets. This division shields your personal belongings from business-related liabilities or legal issues.
2. Credibility and Professionalism
Incorporation brings a level of credibility and professionalism to your business. You signal stability and a strong commitment to long-term success, which resonates positively with clients, partners, and suppliers.
Incorporating your business also opens doors to larger corporate partnerships and contracts that may otherwise be out of your reach as a sole proprietor. Many corporations prefer engaging with incorporated entities, so making the change will expand your business prospects.
3. Access to Capital
Incorporation significantly improves your ability to secure financing. If you need capital to grow your business, having a formalized legal entity boosts your credibility and attractiveness to potential investors and lenders.
4.Tax Advantages
As a sole proprietor, you might face higher self-employment taxes. Incorporation lets you access various tax strategies that reduce your overall tax liability and give you substantial financial benefits. If you choose to make your business a C Corporation, you may qualify for tax benefits that include:
- Wage, salary, and bonus deductions
- Fiscal year flexibility
- Charitable donation deductions
- And more
5. Future Planning
Incorporated businesses benefit from perpetual existence, ensuring continuity even with ownership changes or personnel turnover. This stability is crucial during transitions and contributes to long-term business success.
Incorporation offers a versatile platform for retirement and succession planning. You can establish retirement plans for yourself and your employees, to create a more secure future for your key staff members.
Partner with Equify to Take Full Advantage of Incorporation
Changing from a sole proprietorship to an incorporated entity is a strategic move that can change your business’s trajectory. While the decision requires thoughtful consideration, the benefits speak for themselves.
Equify Financial is ready to help you strengthen your business’s foundation and unlock its full potential. We understand your industry and the competition you face. When you choose to partner with Equify, we will build a relationship that helps you explore all the benefits of incorporation so your business thrives. Find your local structured finance representative to schedule a time to visit and talk about your options.