Friends told you your great idea would make a great business – your own business where you call the shots and where you answer to you. After some serious day dreaming about what that career choice would entail, you take the plunge.
You’ve hung your “shingle” online or in front of your brick-and-mortar piece of the American dream. You’ve made a business plan that would impress a Harvard business grad. You have a great market strategy. Customers have found the little jewel you created, and they want it. Success. Yes?
Possibly. Hopefully. Now, you need to protect it for your own financial independence and the next owners of your jewel.
Incorporate your business today.
That’s the advice a CPA or tax lawyer would give you. Most new business owners are not CPAs or tax experts and would rather eat ground glass than deal with legalese and taxese any more than they have to. Understandable. Microsoft is a corporation. AT&T is a corporation. But your bead making business in Des Moines needs to be a corporation, too.
What is a corporation?
“A corporation is a legal, artificial person, a person that is separate, distinct and apart from you. It is not you. You are not it. It is a distinct. . . totally separate legal or artificial person. A corporation is a distinct legal entity.”
Nevada State Corporate Network
Incorporating may not be on new entrepreneurs’ to-do lists. Here’s why it should be.
1. Tax Savings
Enjoy the same tax breaks that the big guys get.
2. Credibility with your customers
Your business is automatically seen to be more stable with an Inc. or LLC in the tile.
3. Business Credit separate from your personal credit
Credit for a corporation is easier to get than for an individual. Your personal assets are not called upon to get your business growing to the next stages.
4. Limited Liability
“As a shareholder in a corporation you can’t be held responsible for the debts of the corporation unless you’ve given a personal guarantee.”
Susan Ward, Your Guide to Business, Canada
“One in every four small businesses has been sued or threatened with a lawsuit in the past five years. There is one lawsuit filed every 2.08 seconds. One lawsuit can damage or destroy your livelihood, forcing you to close your doors.”
Nevada State Corporate Network
5. Unlimited Life Span
Patrick J. O’Neill, President of Start-a-Business.com, writes that, “Corporations usually have a perpetual life as well, distinct from that of the shareholders.” Healthy corporations can be passed on to an unlimited number of next generations.
Where to Incorporate
You do not have to incorporate your business in the state in which you actually live.
Every state in the U.S. has different rules about incorporation, but there are definitely one or two that have more advantages, hands down, than the rest. Delaware is one of them. Nevada is another.
“Nevada’s corporate statues started with those of Delaware and then went even further, establishing a corporate structure that allows investors and owners of Nevada corporations to remain completely private – an advantage that is unique throughout the world.”
Nevada State Corporate Network
A business might possibly be one of the biggest investments we ever make. Investing in the protection of incorporation is the best thing you can do for it.