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Why Incorporate?
Why incorporate?
Limited Liability
Tax Advantages
Raising Capital
Other Advantages
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Why Incorporate?
There are many reasons why incorporating can be
beneficial to businesses, from limited liability for owners to
significant tax advantages.
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Limited Liability
Limited liability is one of
the greatest advantages of incorporating. A corporation is considered a separate legal entity
from its owners, meaning that the owner’s liability for the
corporation’s debts is limited. This is a great advantage and provides
peace of mind for owners who know that their personal assets are
secure.
Consider this: a person in business without a
corporation or LLC can be held personally liable for the business’s
debts or other liabilities. Unlimited liability means that a creditor
may go after the owner’s personal assets, such as homes, cars, bank
accounts or other property to satisfy a debt.
A corporation or LLC can provide limited liability
for owners and secure their personal assets.
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A corporation or LLC can provide owners with
significant tax advantages, saving them considerable sums of money. For
example, taxes paid on employment may be significantly lower in a
corporation than self-employment taxes paid in a partnership or sole
proprietorship.
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Another advantage to incorporating or forming an
LLC is the enhanced ability to raise capital. As a shareholder in a
corporation, an investor has the advantage of limited liability, whereas
investing in a partnership or sole proprietorship could encompass
substantial personal risk. For this reason, investing in non-corporate
ventures is undesirable.
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Other advantages, such as deductible health
insurance and attractive retirement options may exist for corporations
that do not exist for partnerships or sole proprietorships.
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