Why you should incorporate a business

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Why you should incorporate a business

I always get asked "Should I register as a business?" and it's not as difficult as people think. I have a feeling that people think it's super difficult because it's semi technical and no one really talks about it. Loads of people are selling something online from little trinkets they make at home like jewelry to bigger items like furniture. If you're making more than $600 a year off of these items you're selling then you should look into incorporating a business to protect yourself and your venture. Keeping your business and personal life separate is best in the long run so you should start now.

Why you should think about incorporating a business
Incorporating a business is the next step after you have an idea and a plan of action, if you don't have these then there is no reason to incorporate. If you're already selling something online you'll want to be seen as more professional so incorporating is a great thing for branding your items. Filing your articles of incorporation will give you a line of defense when it comes to your personal and business life.

  • Incorporating a business keeps your personal and private funds separate.
  • Having your own business lets you sell as a brand and not a person.
  • If you plan on selling your systems or products, having a company will make it easier than a sole proprietor.

How much does it cost to Incorporate?
Incorporating isn't as painful to your bank account as you would think. If you're already making money selling your product or offering your services, then you can easily incorporate with a weeks worth of payments or less. Generally it cost between $80 and $200 depending on which state you live in. If you want to trademark your business name then that's where the real money comes into play. I don't remember the exact figure, but I think a cheap trademark is around $350 a piece.

How long does it take to incorporate a business?
Incorporating a business doesn't take long, but it's definitely not an overnight type of thing. It took me and my business partner around 3 weeks to get everything in order and then open a business bank account. It's not a super long time, but if you need it done overnight then you're going to be pretty sad because that's just not how it works.

C Corp [Vs] S Corp - Which should I choose?
Choosing which type of corporation really depends on the amount of shareholders you plan on having. If you're going to be under 100 shareholders, which most of us will be, then you'll want to go with an S Corp. If you have a huge amount of funding and you have more than 100 shareholders, you'll want to be looking into a C Corp.

In conclusion, it's not as scary to incorporate a business as you may think. It's a fairly simple process that takes a little bit of time and some up front payments to get everything going. Choosing the type of corporation you want isn't that difficult, just do some research and you'll easily be able to figure out which one fits your plan best.

Hopefully this helped out some people Why you should incorporate a business

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While I agree that after a point you need to start moving on and develop your own business if you make a profit from selling anything online. I consider that sometimes it may be better to keep it personal, because you won't pay any additional cost of starting a business and you won't pay any taxes of course.

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That's true, but if you think about it in the long run, you won't be able to sell yourself to another business that would pay you $XXX,XXX for everything. If you have incorporated and have plenty of paperwork to show your profits it's much easier to make a sale than telling them you own a few websites making $X,XXX per month Why you should incorporate a business

You can even incorporate a business name and run every website under that business name. I have close to 20 websites running right now and they all operate under one business name Why you should incorporate a business

So if I ever did decide to sell all of them at once, I could just sell my business at one price instead of selling something 20 different times. Now some people may just be interested in purchasing one website and not all of them, which is fine, but they would rather do business with an actual company than a single person. That's just what I know from personal experience.

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Over here, the first advantage of corporation over single proprietorship and partnership is the lower tax rate. That may be the reason why even small businesses would register as corporation with the securities and exchange commission. Another advantage is the ownership which can easily change hands. You sell your shares of stocks and that’s it. With a single proprietorship, I don’t think it is possible to do that. With the earnings, it is also transparent with the dividends that are distributed when the corporation earns.

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In my country if you want to license a business you must first license a business name after that you get to choose between Sngle Proprietorship, Partnership or Corporation, mostly people opt for a single proprietorship business because it's easier to license and the business would be in the name of one owner only. If the business has 2 owners but less than 5 then it automatically falls to a partnership business in the event that there are 5 or more owners then it's classified as a corporation.

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