There are so many benefits that emanates from incorporating a business. This is a fundamental way to separate your business life from your personal life. Below are some of the advantages of company incorporation.
First and foremost, you will always promote business longevity whenever you incorporate your company or business. In this life, you will always have a limited lifespan and a time will come for you to depart from this life. You need to abhor having a sole proprietorship as it will eventually die the moment you die. Company incorporation enables you have heirs to your business and those heirs will always have heirs as long as the company is functional.
With an incorporated company, you will always benefit from limited liability. It is after separating your personal life from your company that you enjoy the benefits of limited liability. In other words, you will never be responsible or liable for any company’s debts whatsoever. Where a company has debts and is sued or even files bankruptcy, your personal wealth and assets will never be at stake whatsoever.
The tax rates for incorporated businesses are always lower. Sole proprietors are always enrolled through a full-rate tax system. Nonetheless, when you have incorporated your company and business, you are always allowed to pay a lower tax rate annually.
Where your company is incorporated, you will always benefit from tax deferrals. Whenever you have an incorporated company, you are always taxed on your income and nothing more. This means that you are not taxed for the money that you haven’t earned or that hasn’t been sent to your account. Thus, you could have an option of avoiding taking your income from the company and this will help you avoid being taxed. This is never the case with a sole proprietorship where you are taxed on the profit acquired for the business.
Companies are not immune to losses and where you incur losses, you will never be allowed to pay taxes. Businesses like sole proprietorship will never have a chance to carry their losses forward to another fiscal year. Nonetheless, you will always benefit from sharing your losses with other fiscal years where your company is incorporated.
Incorporated companies have multiple payment options. For instance, you could decide to pay your stakeholders their money as salaries or even dividends. Whether you settle for salary or dividend, you will be benefiting. The salary that you would be paying your family members could be accounted for as company expenses. there are instances where you can opt for dividends instead of salaries which will attract low taxes.
There are multiple and tremendous benefits of company incorporation. The above are just but a glimpse of the benefits. Therefore, you should consider incorporating your business today and enjoy the benefits maximally.