During your journey of starting your own business, you may have read or heard the suggestion of incorporating your business. Incorporating your business means turning your business into a company that is recognized by the state of incorporation. When this happens, the company becomes its own legal structure that is independent of its owner(s).

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There are several advantages of small business incorporation:

  • Limited Liability– when a company becomes incorporated, the shareholder’s liability is limited to the amount they have invested in the company.
  • Continuance– a corporation will continue to exist if the shareholders leave the business or if the ownership changes. Selling a corporation is a much easier process compared to a sole proprietorship.
  • Raising Capital– money is the primary key to success, and an incorporated business has more opportunities and generally, an easier time raising capital. While corporations can borrow and incur debt like an unincorporated business, they can also raise capital through equity financing (selling shares).
  • Income and Tax Optimization– once incorporated, you can take your income at a time when it is more beneficial for you with regards to taxation instead of taking a salary when the business receives income.
  • Credibility– this advantage falls more in line with behavioral economics, but consumers often view companies with Ltd., Inc. or Corp. attached to their names to be more stable than unincorporated businesses. However, just because you incorporate your business, does not mean you have to add it to your name.

When it comes to seeking funding, it may be in your best interest to consider incorporating your business. HJR Global is ready to help meet your funding needs.

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small business incorporation

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