Whether to incorporate a business or not is oftentimes the question faced by those who are considering of expanding their business. They are concerned about giving up full ownership of their business, but at the same time, they also know that they need to set up a serious presence in the industry.
Before entirely giving in or disregarding the idea, learn the pros and cons of company incorporation first. While there are many benefits of incorporating a business, there are also some disadvantages.
One of the benefits of company incorporation is it brings an added credibility. It gives the business a quick authority as it creates a new legal body in the place or country in which it was created. People choose to transact business more with authorized entities that have "Inc." or "LLC" affixed to their name.
One of the most important benefits of company incorporation is the protection from liability it provides owners, shareholders, and officers. They are shielded from debts and other financial and legal liability of the company.
Another advantage is tax flexibility. Owners aren't v to pay the whole company's taxes, only the taxes from earnings paid to them. This is because a corporation is seen as an independent legal entity.
The existence of an incorporated business is not dependent on its people, so even if the owners or the management changes, it continues to exist through transferring of shares to others.
As for disadvantages, it costs money to incorporate a business. Corporations need to make necessary investments to devote to the required record keeping guidelines of the government and other regulations.
Also, there are many formalities needed in company incorporation. It is subject to stricter laws than other business types. Paperwork must be complete and filed on a timely manner, records and permits must be kept in a certain manner as dictated by the government.
Shareholders likewise experience double taxation. The company pays tax, stockholders also pay tax from the earnings they obtain from the company.
Many businessmen prefer not to incorporate their business because of its complicated and expensive procedure of company incorporation. You can weigh the pros and cons of incorporation before you decide which path your business should choose.
Before entirely giving in or disregarding the idea, learn the pros and cons of company incorporation first. While there are many benefits of incorporating a business, there are also some disadvantages.
One of the benefits of company incorporation is it brings an added credibility. It gives the business a quick authority as it creates a new legal body in the place or country in which it was created. People choose to transact business more with authorized entities that have "Inc." or "LLC" affixed to their name.
One of the most important benefits of company incorporation is the protection from liability it provides owners, shareholders, and officers. They are shielded from debts and other financial and legal liability of the company.
Another advantage is tax flexibility. Owners aren't v to pay the whole company's taxes, only the taxes from earnings paid to them. This is because a corporation is seen as an independent legal entity.
The existence of an incorporated business is not dependent on its people, so even if the owners or the management changes, it continues to exist through transferring of shares to others.
As for disadvantages, it costs money to incorporate a business. Corporations need to make necessary investments to devote to the required record keeping guidelines of the government and other regulations.
Also, there are many formalities needed in company incorporation. It is subject to stricter laws than other business types. Paperwork must be complete and filed on a timely manner, records and permits must be kept in a certain manner as dictated by the government.
Shareholders likewise experience double taxation. The company pays tax, stockholders also pay tax from the earnings they obtain from the company.
Many businessmen prefer not to incorporate their business because of its complicated and expensive procedure of company incorporation. You can weigh the pros and cons of incorporation before you decide which path your business should choose.
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