People who involved themselves in business planned to gain big profits and hoping the business can guarantee their future. If you’re in a small business or big businees and and you’re doing very good, I’ll tell you why you should start a corporation if you haven’t start one yet.
Situation: Alex has a small business in Retail, Hire and Repair industry. He’s doing very good, earning big profit and he’s enjoying all the benefits because he’s the sole proprietorship of the company. One day, one of his co-worker reckelessy done a mistake which involved damages on customer property and the next thing he knows he’s slapped with lawsuit. Since he’s the big boss, I mean the sole proprietorship of the company he lost his assets, saving and house. What make it worse is, it looks like he’s going to lost his marriage too.
If by that time he already incorporated his company, he would’ve prevent something worse like that from happening. When you are incorporating a small business, there’s liability meaning your corporation stand as another legal entity separates from your personal life. Any business that’s likely to get lawsuits should consider incorporation because any debts or lawsuit will incurred by the company, not the sole proprietorship. Taxation is another benefit you’ll get from incorporation. You should discuss with your accountant on how corporations are often taxed at lower rate.
When you start your own corporation, you can sell your company’s share meaning it’ll be easier for you to raise money than any other type of business. Lastly, corporates business is likely easier to sell than non-corporate business because non-corporate business is hard to valuate properly. There are few things that you should consider before you start your own corporation:
- Name of your corporation – it should be unique and have no trademark problems.
- Select a corporation type – determine the best type of corporation for your business–LLC, S corporation or C corporation.
- Choose Your Share Type – Corporations can issue common and preferred stock. Select the best for your situation.
The procedures will vary depending on your type of business. Discuss with your lawyer and your accountant if you have any doubt.