There’s so much to be thankful for as an entrepreneur, and I’m quick to count my blessings throughout the year. But from the perspective of a small business owner who runs a corporation, there are a few extra things to add to the “I’m Grateful For” list this Thanksgiving.
1. You Never Have to Worry About Your Personal Assets
When you’re a sole proprietor, if you ever were to be sued, your personal bank accounts, retirement accounts, or even your home could be used to cover legal fees. But as an incorporated business owner, your personal assets are separate from that of the business, and can’t be used in that scenario. Let’s raise a glass to not having to worry about that!
2. You Feel More Professional
There’s a certain level of gravitas that comes with being able to put “Inc.” at the end of your business name. And even if you don’t choose to add it to your name, simply being incorporated can make you feel, well, more real as a business owner. And customers may take you more seriously as well.
3. You Stress Less Over Taxes
Being able to file your taxes once, thanks to what’s called pass-through tax, saves the headache of filing both personal taxes and business taxes, the way you would if you weren’t incorporated. And you may qualify for tax savings as a corporation. Hey, I’m in favor of paying less in taxes, and I’m betting so are you!
4. Your Business Can Outlive You
If you want to pass your business on to your kids, it’s simple enough to do so with a corporation. Because it’s a separate entity, it has an unlimited life of its own. It will be around as long as the business operates. And it can be transferred to a new owner when you’re ready to retire through an exchange of assets for stock.
5. You Can Build Your Business’ Credit Independently of Your Own
With a corporation as its own entity, you can build credit, borrow money, and sell equity to raise capital through the corporation itself. And investors prefer to invest in a corporation because of the limited liability and ease of transfer of the investment, so being incorporated makes you the belle of the investor’s ball!
6. Your Finances are Easier to Track
When you’re incorporated, you need a separate bank account from your personal account, which makes it easier to keep track of your profit and loss, and makes it simpler to get a birds’ eye view of your finances.
7. You Can Invite More People to the Party
Running a corporation, you can have multiple owners, which can take the pressure off of you to do it all. Most corporations allow an unlimited number of shareholders, though the S-corp limits that number to 100.
If you’re not yet incorporated, perhaps this list will convince you that you should be. There are ample benefits to incorporating your small business, with virtually no drawbacks. If you’re already incorporated, celebrate your wise decision.
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