Why Incorporate?

Whether your company is large or small, incorporating is a smart business decision. Here are five key benefits to forming a corporation, LLC, or non profit.

1. Protect your business name
Usually when you file your business entity, other corporations can not file using the same name in the same state.

2. Establish legitimacy
Once you establish your business as its own entity, you gain legitimacy.  You can do things with your business that are often more difficult for sole proprietors, such as raising funding, finding advisors, and partnering with other companies.

Potential customers also appreciate dealing with registered companies that they know will be around for a while.

3. Bulletproof liability protection
Operating your business as a sole proprietor leaves you personally responsible for your business's liabilities, putting your personal assets at risk.

Incorporating your business forms a separate legal entity for your business. Operating your business as a separate entity protects your personal assets, like your home, car, and savings.

4. Perpetual existence
With a partnership or LLC, if an owner dies or leaves the business, the company ends with it.  When a separate business entity is formed, the company continues despite changes in ownership or management.

5. Tax benefits
An incorporated business can be taxed separately from the owner, which is favorable in many cases.

If you have a non-profit organization, you can't be considered for tax exempt status until you have incorporated.  Without tax exempt status, it is extremely difficult to receive grants and other charitable giving.  Any donations you receive are not tax deductible.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.