Choosing how your business is organized may be one of the most important decisions you make. Incorporation may be the wisest decision, but for some, it may be an unnecessary decision. So, each business should carefully assess the benefits and challenges of incorporation with an experienced business lawyer before moving forward.
Benefits of Incorporating
Regardless of their size, all businesses can benefit from incorporating. Some of the advantages of forming a corporation or a Limited Liability Company (LLC) include:
– Personal asset protection: Incorporating your business will allow you to separate and protect your personal assets.
– Additional credibility: Adding “Inc.” or “LLC” after your business name will add immediate authority to your entity. In most situations, consumers, vendors and partners prefer to do business with an incorporated entity.
– Name protection: In the majority of states, other businesses may not file your exact corporate or LLC name in the same state.
– Tax flexibility: Corporations can avoid double taxation of profits and dividends by electing Subchapter S tax status. Although the profit and loss margin of an LLC will pass through to the owners, the LLC can elect to be taxed as a corporation to avoid this problem.
– Deductible expenses: Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners.
The business lawyers at Daily Aljian LLP can provide you with more information as to why you should incorporate your business and will also help you determine which entity is the best decision for your business. Contact our offices at (949) 861-2524 to discuss your legal options.