When you think of starting a business, the first thing which crosses your mind is how to structure it in a way that it meets all the legal requirements. In other words, the question which you ask yourself is whether or not you should incorporate yourself.
Regardless of whether you have already made up your mind to form an official structure of your business or are playing the waiting game to do so as and when it picks up, here are the reasons why you should consider incorporating your business online.
Reasons to Incorporate Your Business Online
- Separate Personal Assets from Liabilities: When you operate your business as a partnership or sole proprietorship, you remain liable for company debts. It means that your personal assets may be used to settle the company debts, should the need arise. In a nutshell, it exposes your personal assets or savings to the risk of being confiscated to resolve any financial issue pertaining to your business. Incorporating your business online or forming an LLC before launching your product or service offers protection, thereby taking your personal assets out of the equation.
- Prevent Misunderstandings: No matter how close you are to the other business partners or co-founders, chances are there would be an argument on how the equity should be split. The formation of an LLC involves paperwork to prevent misunderstandings pertaining to equity splits. Thus, it provides a better understanding of how the ownership is to be split.
- The Issue of Stock Options: In the course of your business, you might be tempted to compensate your employees, contractors or vendors by either granting stock options or by giving them the chance to own equity at a lesser price. Although you may do so by means of a pre-incorporation agreement, it is simpler to incorporate the company before making such offers.
- Establish Business Credit or Get Funding: Sometimes you may feel the need of investment from third parties like venture capitalists in your business. Having a formal business structure in the form of LLC or Corporation in place adds transparency to the process. Besides, your business will be able to generate its own profile which can come in handy for a business loan or get a line of credit later on.
- Credibility: One of the best ways to boost the image of your company in the eyes of customers or clients is to incorporate it. With a formal business structure, you will be able to win more contracts and form association with larger companies. Both can go a long way toward making your business successful in the long run.
- A layer of Privacy: If you want to prevent access to the information related to your business or home address, it is a good idea to incorporate your company as it brings the agent who is registered with your company into the limelight in most cases. As a result, you get an extra layer of privacy.
- Potential Tax Benefits: When it comes to paying taxes, there is a possibility that the individual tax rates may exceed corporate tax rates. Owing to it, LLCs or Corporations may qualify for additional tax benefits. If you incorporate your business online, you can boost the chances of getting the tax benefits. For detailed information, it is strongly recommended that you consult your tax advisor or reach out to the experts of reputed service providers like Incfile.com. By going through incfile reviews lends credence to the quality of service of the company.
Thus, it is clear that having an LLC or Inc. is a major step in the direction of taking your business to the new level. Most business owners have subscribed to this fact via Incflie reviews for Incfile.com or the customer reviews of other such service providers in the United States.