Why Incorporate? What Every Business Owner Should Know

Business has never been better. Word of mouth finally seems to be spreading, every seat in the restaurant is full, you?ve even hired extra staff. So, what now?

If you?re like a lot of small business owners, you?ve been wondering about the benefits of incorporating. But is it really necessary? While things may be going smoothly now, the main reason most people form a legal business entity is to safeguard their personal assets. When you incorporate your business, or form a Limited Liability Company (LLC), you're free to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability. This is, in fact, one of the best moves you can make to protect your personal property when you own your own business.

Let?s take a closer look at all the benefits of incorporating or forming an LLC:

? Peace of Mind. As I mentioned above, if you operate as a sole proprietorship or general partnership, you're personally responsible for any business debts or lawsuits against your business. Almost anything you own can be at risk! But owners of corporations maintain separate business and personal identities. So if you incorporate your business, your personal assets are protected from any liability incurred.

? Uncle Sam. Corporations are taxed at a lower rate than you are. And when you're incorporated or an LLC, expenses like insurance or travel and entertainment, both for you and your employees, can be tax deductible as business expenses.

? The Name Game. Put simply, an Inc. or LLC after your company name implies a real legitimacy to your business that will impress potential customers, vendors and lenders. It essentially says you're for real, you're committed, and you should command respect. It?s truly one of the big benefits of incorporating.

? Catch the Eye of Investors. When you incorporate your business, you?ll be allowed to attract investors through sale of stock. And investors will feel much more comfortable if they're protected from any liability, too.

? Life Expectancy. Corporations have a business life that extends beyond an owner, principal or partner. So, another of the benefits of incorporating is that it wards off any legal entanglements or even termination of the business in the event of long-term disability or death.

? Trouble-free Transfer. Incorporation allows you to transfer ownership through simple sale of stock.

? Shared Responsibility. While you or a partner may be the ones making the day-to-day decisions, your board of directors (a requirement when you incorporate your business) allows other major investors to review the business periodically and buy into decisions. This lessens the danger of any one or two individuals making a bad decision that could seriously hurt the business.

Still asking, ?Why incorporate?? Well, these are just a few of the benefits of incorporating. Of course, not all that glitters is gold. There may be some drawbacks, too. If you?re still undecided, talk to an attorney, accountant or an online incorporation firm. They can answer your questions and, if you decide to give it a whirl, they can also assist you in setting up your LLC or corporation for a pretty reasonable price.

Samantha Fishman is a web-based investor and entrepreneur. She operates dozens of sites and has an MBA in Technology Management