Incorporate Your Way to Wealth - How to Make More Money Without Selling a Single Additional Item!

To run a profitable internet based retail/resale/auction business, you already know what you need to do ? buy low and sell for a profit. This series of articles will provide you with a basic overview of incorporation and its benefits for your small business, as well as some resources to begin the process. This will help you take your selling one step further to make your business more profitable WITHOUT HAVING TO SELL A SINGLE ADDITIONAL ITEM!

The secret to doing this is to set yourself up in a legal business entity, specifically, a corporation. Even a small business can be a corporation. There are several forms of corporations such as a C corporation, an S corporation and a Limited Liability Corporation (LLC). All corporations are legal business structures that are separate entities for doing business. They provide different legal protection and tax benefits than doing business as a sole proprietor or selling with no business form at all. The type of corporation that is best suited to your needs will vary depending on your total revenue and how many people are in your corporation.

Here are some characteristics of the different business forms:

SOLE PROPRIETORSHIP

*NO LIMIT ON LIABILITY.

*Self managed.

*Owned by one individual.

*Inexpensive to establish.

*Few administrative duties involved (i.e., not a lot of paperwork to maintain)

*UNLIMITED PERSONAL LIABILITY.

*No tax benefits.

*Owner is responsible for paying taxes.

C CORPORATION

*LIMITED LIABILITY.

*Managed by Board of Directors. This can be you alone or with partners.

*No maximum number of owners

*Company paid fringe benefits(e.g. healthcare, continuing education)

*Tax savings over no business structure.

*There will be some cost to form.

*More administrative duties.

*Corporation Pays Its Own Taxes.

S CORPORATION

*LIMITED LIABILITY.

*Managed by Board of Directors. This can be you alone or with partners.

*Maximum of ownership of 100.

*Tax savings over no business structure.

*Will be some cost to form.

*More administrative duties.

*Taxes pass through to owners.

LIMITED LIABILITY COMPANY (LLC)

*LIMITED LIABILITY.

*Managed by members and/or managers.

*No maximum number of owners, minimum of one.

*Pass through entity. Tax savings over no business structure.

*Can be costly to form.

*More administrative duties.

*Usually Taxed As A Partnership.

The process of incorporating can be an intimidating thought for some people and it does require a bit of initial effort on your part, but it will increase your profits substantially over the years.

Now, you may be thinking "I am just selling a few items online, why would I want to set up a corporation?" This is a valid question. One of the benefits to incorporation is that it helps to protect you from personal liability lawsuits that could arise in the course of doing business.

When you set your business up as a corporation (not a sole proprietorship) you provide yourself with an added layer of protection from lawsuits. Yes, the people who purchase items or services from you can sue you if they have any problems that arise which they feel are a result of the use of your product or service. If you are not acting as some type of corporation, that person can sue you directly and they can sue for any or all of your personal assets. If you are sued as a corporation, generally only the assets of the corporation can be included in the suit. In other words, you are protecting your home, your investments, your savings, etc. For specific advice on this topic, please consult an attorney who specializes in small business issues. The peace of mind you will obtain is itself invaluable.

Now for the fun reasons to incorporate. You get to keep more money! "Karen! You've got to be kidding!" "No, I'm telling you it's true!" (I just wanted to see if you were still with me :-) When you run your business as a corporation, you get to take a myriad of tax deductions that you could not have taken before if you were working without any type of legal business structure.

We will discuss the types of deductions in the next article in this series. We'll also review some resources to help you in setting up your business. In the meantime, start researching the best business model for your business and begin work on establishing your business entity.

Karen Grant is CEO of Divine Finds, Inc. and is author of the book Incorporate Your Way to Wealth She has also developed several websites, the latest being www.FindMoreFacts.com an informational website for home and small business resources. This site contains descriptions and comparisons of web hosting sites, internet marketing sites, online incorporation sites, and more along with more articles and information on starting and running a business.

The reader is cautioned that this article is provided with the understanding that the Publisher and Author are not engaged in rendering legal, accounting or other professional services. Since everyone?s situation is different, readers are urged to consult their own legal or tax advisor for advice regarding their particular needs.