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. Below are some of the advantages of company incorporation.
First and foremost, you will always promote business longevity whenever you incorporate your company or business. There is nobody that is immune to death and you should be able to keep your life out of the limited brackets. Therefore, you need to avoid having a sole proprietorship and incorporate your business. Company incorporation enables you have heirs to your business and those heirs will always have heirs as long as the company is functional.
With an incorporated company, you will always benefit from limited liability. The only way you will enjoy and benefit from limited liability is where your personal life and business life are parallel. In other words, you will never be responsible or liable for any company’s debts whatsoever. 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. You will not be subjected to full tax rates like a sole proprietor. Nonetheless, when you have incorporated your company and business, you are always allowed to pay a lower tax rate annually.
This is a golden chance for you to 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. Therefore, you could avoid getting your income from your company and this helps with tax deferrals. Basically, this is a plus when compared to sole ownership of the business as all the profits are taxed instead.
There is no way you will have to pay taxes when you have incurred losses. Where you have not incorporated your business, you will never have the opportunity to share the losses with other fiscal years. However, with an incorporated business, your losses will be scattered and carried forward to the other years.
Incorporated companies have multiple payment options. For instance, you are to determine whether you will pay your stakeholders via salary or dividends. Whether you settle for salary or dividend, you will be benefiting. Where you have hired family members, you could have their salary filed as company expenses. there are instances where you can opt for dividends instead of salaries which will attract low taxes.
There are multiple and tremendous benefits of company incorporation. The points above are just but a few. Therefore, make a point of incorporating your business and jettison sole proprietorship.