Why Incorporation
One of the first major choices a business owner must make is whether or not they want incorporation for their business. There are a number of advantages and disadvantages of incorporation which will usually influence a business owner to decide if they are interested in incorporating their business or not. The other two options available to a business owner if they decide against incorporation is sole proprietorship or a partnership.
One of the first major advantages of incorporation is that the business will be considered a separate legal entity so if you business were to fail or you were to be sued you would not end up in financial ruin. There are also taxation and capital advantages that can make incorporation an attractive option for many business owners. The last major advantage to choosing incorporation for your business is that it will live on even after you are gone since these types of businesses are considered to have an unlimited life legally.
Like everything else there are some disadvantages to incorporation that you will need to consider before making your decision. While taxation can be an advantage for incorporation it can also be considered a disadvantage in some situations since you will need to prepare 2 income tax returns each year and you are not able to deduct any losses from your personal income like you are with a sole proprietorship. The other major disadvantage that you will need to look into when you are considering incorporation is that the registration process is longer than the other business types and the fees you will need to pay will also be higher. If you are considering any serious business decision you would be wise to speak with a business lawyer and get their advice. You can find a local business lawyer in our free legal directory located here.
