Should You Incorporate?Please Click On Uncle Sam For Detailed Information.
Some small and home businesses definitely do benefit by incorporating. One benefit is an enhanced image. Being able to include the abbreviation "Inc." at the end of your business name makes your business appear to be bigger and more established than an unincorporated business. Another benefit can be a pronounced reduction in taxes. This is particularly true if the S election is made and an appropriate mix between dividends and salary is chosen. Also, small businesses can gain liability protection if they are corporations. Personal liability protection is the reason most often given for deciding to form a corporation. Legally, a corporation has its own identity which is separate from the identity of its shareholders. Theoretically, then, if your corporation is sued and loses, only the corporation, and not you, will be responsible for paying damages. However, this may not help much if you are the sole shareholder. If you do something that causes legal liability, it is likely that both you and the corporation will be held liable. You cannot excuse your own misconduct merely because you have formed a corporation. Also, lenders and landlords often require personal guarantees on loans and leases. If you make such a guarantee, then the corporate form of business has no effect on your personal liability. An attorney is not a legal requirement. However, certain knowledge is necessary in order to properly file the required incorporation or LLC documents in your state.
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