Advantages of Incorporating
Reduces Personal Liability
Incorporating helps separate an individual's identity from that
of his or her business. Insurance may still be necessary, but
incorporation contributes an added layer of protection.
Careful planning of entity type can result in lower overall tax
Reduces Likelihood of an IRS Examination
IRS Form 1040 and Schedule C (Profit or Loss from a Business),
particularly of higher gross income levels, is the target of many
IRS Audits. Incorporated businesses have a much lower audit rate,
even if they have high income levels.
A Corporation can be established in such a way that shareholders/owners
remain anonymous. Often this same anonymity can be accomplished
for officers and directors.
A corporate structure communicates permanence and credibility.
Even a company with only one stockholder and employee may incorporate.
Easier Access to Capital Funding
With a corporation, investors are easier to attract through the
sale of stock.
Easier Transfer of Ownership
Through the sale of stock, ownership of a corporation may be transferred
without substantially disrupting operations. The need for complex
legal documentation is also reduced.
(This information is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, consult with your professional advisor.)
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