Business like life is an ever-changing landscape. If you exercise sole proprietorship now and it works, this does not mean you will not make room for other changes. Having to incorporate later is a key issue you may face so it?s better to know what this transition entails.
What is incorporation?
Incorporation is a business organization that helps define lines between personal and business investments. Being able to incorporate your business is likely to produce a separate business entity that allows flexibility. What you buy for your personal investment is yours and what you buy for your company will remain for your company.
Such settings prohibit crossing boundaries especially when money is concerned. If you go bankrupt and need to file for bankruptcy, your creditors cannot involve your company assets once you have taken steps to incorporate it. Your business retains status quo and you may even afford to develop it to gain more profits. The same also applies if your business suddenly folds up. Business creditors cannot go after your own house, cars, and other investments you acquired as an individual. You retain your property and ensure financial safety to a personal extent.What are the differences between LLC and incorporation?
Many start-up company owners have long been confused between a limited liability corporation (LLC) and incorporation. To separate the two, look at several unique features for ownership, duration, and taxation.
In an LLC, owners are regarded as members. Members could be individuals or companies. Incorporation owners are called shareholders and are comprised of individuals. When a member dies or suddenly files for bankruptcy in LLC settings, the company ?dies? along with the situation unless legal and advance agreements have been made in case the situation occurs. Corporations have no such burden. If a shareholder dies or leaves, the company can still go on because the setup allows shareholder transferability. Shareholders have full discretion and need not consult nor get others to agree about transferring shares.
Taxation is another matter to consider. LLCs are only taxed once, while corporations undergo what is known as double taxation. In a corporation, the company itself is taxed and individual shareholders are taxed once again for their earnings.
It may sound like a disadvantage for the corporation side, but it is one aspect that comes well within its territory given its other benefits. Think of it this way, all business forms will have its pros and cons and it is up to the management to maximize the benefits and minimize the disadvantage.
What does it take to incorporate?
Incorporating can be a burdensome event given that you have to worry about articles of incorporation and filing appropriate papers to correct government authorities. Doing it on your own is not impossible but it can be emotionally, mentally, and physically taxing. Research for the proper articles of incorporation is already a feat you can be proud of if you survive it.
Fortunately, there are several available options. ?Incorporate online? is a usual business slogan easily seen on the Internet and companies offering it enable businesspeople to gain affordable help. Incorporation services available on the Internet are more affordable and faster. Incorporate online support packages may come as low as $49 compared with the $200 per hour charged by many lawyers.
Source: http://www.panlog.org/income-online-an-approach-to-have-a-better-business.html
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