You're ready to achieve your dream and start your own business. There's so much to do and so many plans to make.
You're picking the inventory you'll order. You are negotiating the lease for your space. Excitedly, you tell your friends about your plans. Then one throws you a curve ball.
Will you incorporate?
Most small Ohio businesses begin as sole proprietorships or partnerships. After the business grows, then the incorporation takes place. The form of business ownership you choose when you start isn't your forever choice.
But now your mind is wandering. Should you incorporate? What are the advantages? There are many - just as there are some disadvantages - but let's focus on a few of the advantages for now.
- Personal limited liability: A sole proprietor holds all the liability of the company. When a business incorporates, the liability is limited to the amount a shareholder has invested in the company. As a sole proprietor, things such as your house or your car, could be taken to pay your business debts.
- Corporations endure: A sole proprietorship ends upon the death of the owner. Corporations go on when shareholders pass away.
- Corporations can raise money more easily: Venture capitalists and angel investors put money into corporations, not sole proprietorships.
- Tax advantages: By incorporating your business, your salary can be taxed at a lower rate.
- Better opportunities to increase business: Having the small phrase "Inc." or "Corp." as part of your company's name can give your company instant credibility. Some people prefer to conduct business only with incorporated companies.
These are just some of the advantages for you to weigh as you continue to consider incorporation for your business. An attorney who is experienced in business law can spell out all the pros and cons to help you decide about the formation of your company.