Companies and businesses that have been incorporated have always experienced tremendous benefits. Company incorporation is the most fundamental process of separating your business and personal life. Below are some of the advantages of company incorporation.
To begin with, company incorporation promotes business longevity. There is nobody that is immune to death and you should be able to keep your life out of the limited brackets. A sole proprietorship will always die whenever you die hence the need to jettison it. This will help avail a succession plan and your business will live long for years, decades and even centuries after your death.
With an incorporated company, you will always benefit from limited liability. It is after separating your personal life from your company that you enjoy the benefits of limited liability. This helps you stay away of company liabilities and you will never be responsible whatsoever for the company debts. Your personal life will always remain intact even when your company is sued or is having debts leading to the filing of bankruptcy.
With company incorporation, you are assured of enjoying lower tax rates. Did you know that sole proprietors are enrolled through a full tax rate? This is a plus for you as you will be paying taxes at low rates and annually.
This is a golden chance for you to benefit from tax deferrals. Your personal taxes are only for the dividends or the income that you earn. This means that you are not taxed for the money that you haven’t earned or that hasn’t been sent to your account. Thus, you could have an option of avoiding taking your income from the company and this will help you avoid being taxed. This is never the case with a sole proprietorship where you are taxed on the profit acquired for the business.
Losses are part and parcel of companies and businesses and whenever your company incurs losses, you will never be allowed to tax. Where you have not incorporated your business, you will never have the opportunity to share the losses with other fiscal years. Where your company and business are incorporated, you are assured of carrying the losses forward until you have recovered fully.
Finally, where you have incorporated your company, you will have multiple payment options. For instance, you could decide to pay your stakeholders their money as salaries or even dividends. Whether you settle for salary or dividend, you will be benefiting. The salary that you would be paying your family members could be accounted for as company expenses. Alternatively, you could decide to receive your salaries as dividends which are lowly taxed.
There are multiple and tremendous benefits of company incorporation. The above are just but a glimpse of the benefits. Therefore, you should consider incorporating your business today and enjoy the benefits maximally.