One of the biggest questions for someone starting their own business is whether they should incorporate their business at the formation stage. While a business formation can be expensive during a startup, having the Inc., behind your business name from the beginning may well protect your personal wealth and save you money and protect you in the long run, and it may well help to solidify your image and status as a reputable business, as well as help get investors and formalize your relationship with other owners.
Your best bet when it comes to trying to decide when to incorporate your business is to engage a business attorney and Certified Public Accountant (CPA) to explain the different aspects and advantages of the different alternatives available in a business formation.
In recent years, the limited liability company (LLC) has taken a prominent place in modern business formation in Indiana and Kentucky. A limited liability company can be used to protect the business owner from personal liability and seizure of his or her personal assets to creditors and claimants against the business. Additionally, with proper planning a limited liability company can be taxed as a Corporation, and it may further be able to take advantage of the subchapters’ election for a corporation and employee benefit plans as well as other tax saving benefits.
There are many advantages and disadvantages that you must become aware of when you consider business formation and incorporating your business at this crucial stage. One benefit is that as the owner you may protect your personal assets from lawsuits, claims, liabilities, debts and obligations owed by your company. The idea is to separate your personal wealth from claims against your business.
It is possible for a corporation to raise capital easier through the sale of securities using a company that has an unlimited life. It may be easier to gain the trust of investors when you incorporate your business at the formation stage. Of course, you need a knowledgeable and reputable lawyer in your corner, so you can be sure you are doing what is right for your business. Your first step should be to contact a lawyer and CPA to help you with the necessary legal documents and filings and tax and accounting plans.
Weigh the advantages and disadvantages carefully, seek out an attorney, and then decide if this is the right first step for your business.