Companies and businesses that have been incorporated have always experienced tremendous benefits. there is need to keep your business life separate from your personal; life and incorporating serves the purpose. This article pinpoints the tremendous advantages of incorporating your company.
To begin with, company incorporation promotes business longevity. There is need to understand that human beings have limited years and it will come a time when you will die. A sole proprietorship will always die whenever you die hence the need to jettison it. Company incorporation enables you have heirs to your business and those heirs will always have heirs as long as the company is functional.
The second advantage is the limited liability. The moment you separate your business from your personal life is the moment you embrace and benefit from limited liability. This means that all your company’s debts remain company debts and you will never be responsible. Your personal life will always remain intact even when your company is sued or is having debts leading to the filing of bankruptcy.
Incorporated companies benefits from low tax rates. Did you know that sole proprietors are enrolled through a full tax rate? This is a plus for you as you will be paying taxes at low rates and annually.
With an incorporated tax, you could enjoy lawful tax deferrals. The profits for the company are company’s and you are only taxed for the income you earn. You will never be taxed anything that you haven’t earned. Therefore, you could avoid getting your income from your company and this helps with tax deferrals. This is very different when compared to the sole proprietorship as they will have to file taxes for all the profits.
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. Where your company and business are incorporated, you are assured of carrying the losses forward until you have recovered fully.
Incorporated companies have multiple payment options. For instance, you could decide to pay your stakeholders their money as salaries or even dividends. Each will have its tax advantages. There are instances where you will be working with family members and instead of paying them salaries, you could have their salaries as part of company expense. Alternatively, you could decide to receive your salaries as dividends which are lowly taxed.
There are so many benefits of incorporating your business. The points above are just but a few. Thus, you are to make up your mind and make plans for incorporating your business where you eye to experience the above benefits.