Small business owners have been spending the last year riding the ups and downs of the pandemic and waiting for what we all hope is a post-pandemic surge of economic vitality. While some small businesses sadly closed operations for good, others were able to use government loans and other assistance to stay afloat and make business improvements.
New business applications and formations spiked in the latter half of 2020 following the initial shock of COVID-19 shutdowns, and early 2021 trends look very similar. Incorporations are on the rise, which is not surprising given the potential benefits. If you’ve been waiting for a good time to incorporate your business, now may just be that time.
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Incorporating can have a profoundly positive impact on your business. Whether your business is still finding its footing in the midst of the pandemic or just saw its biggest sales record to date, incorporating can help any business — big or small. Here are some benefits of incorporating:
Protect your personal assets
Whenever you’re doing business, there’s always a possibility for liability. Let’s say you own a restaurant. If your business isn’t incorporated, your personal assets are tied to your business with no distinction in the eyes of the law. If someone gets hurt at your restaurant, that person may be able to sue you and your business. And since there is no separation between your personal assets and your business, your personal assets, like your car, home, and savings, can be at risk.
Even if your business doesn’t entail possible physical injuries, there are still many possible instances that may put you in a risky position if you’re not incorporated. In the end, it’s a safer idea to protect you and your personal assets by incorporating so you can avoid a potentially huge legal mess.
Take advantage of tax benefits
Depending on the business entity you choose, you’re usually able to draw a salary, avoid a higher tax bracket if you’ve been operating as a sole proprietor, write off business-related expenses and losses, and more. All that new office equipment you bought? You may be able to deduct those expenses on your taxes — as long as they follow IRS rules for business deductions, of course.
Grow your business for the future
Did you know that once you incorporate you can obtain loans from banks and lenders much more easily than if you weren’t incorporated? What does this mean for your business? It means that your business can set itself up for success and have more capital to grow. That extra padding of funds can help you hire the right employees and remain competitive in your industry.
Additionally, if you incorporate as an S-Corporation or C-Corporation, you have the ability to sell stocks. This gives you another avenue to acquire capital. Selling stocks can attract investors that can offer funds and guidance as you continue to grow your business for the future.
If you’re looking to make this year better than last year for your business, why not make incorporation part of that goal? We can help you incorporate today. And bonus: Incorporating with Rocket Lawyer is simple. Here are four quick steps towards incorporating:
Not sure which business entity is best for you and your business? No problem. Simply take this business structure quiz to see what entity is right for you. Based on your responses, the recommendation tool will research and calculate the right entity for you. It only takes a few minutes.
If the whole process feels overwhelming, you can talk to our incorporation specialists, or ask a lawyer a question. Our incorporation specialists have helped thousands of businesses incorporate every year and can answer your questions about the whole process. We also have lawyers that specialize in the incorporation process.
Once you’ve figured out the best entity for your business, you can incorporate easily and affordably with Rocket Lawyer. Just choose the state in which you want to incorporate and your business entity, fill in the required information about your business, pick the filing service option you want, and then check out. That’s it!
Make 2021 the Best Year Yet for Your Business
We will see lots of changes this year in our personal lives, our communities, and the economy as a whole. As COVID-19 vaccinations increase and hopefully infection rates decrease, businesses will return to some semblance of normalcy and business activity will increase. Why not take the time to incorporate now and make this year the best one yet for you and your business? Rocket Lawyer is here to help you every step of the way.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.