Whether you’re just considering a new business idea or already become a sole proprietorship or general partnership, you may wonder if incorporating your business is right for you. Discover why the benefits associated with incorporation can outweigh any downsides.
The professionals of Singapore company incorporation
Secure your assets, gain tax breaks. Corporation owners enjoy limited liability protection, and are usually not personally in charge of business debts. So creditors can’t pursue your home or car to pay business debts. Another plus: corporations often gain tax advantages, writing off such things as medical health insurance premiums, savings on self-employment taxes, and life insurance.
Increase your corporation for now-and the near future. Incorporating bolsters credibility, and could help you reach potential new customers and partners. And while you can’t live forever-your corporation can. Even if an owner dies or sells interest, the organization still exists.
Easy transfer and faster funds. Corporation ownership can be easily transferable (with some restrictions on S corporations). Capital can be raised more easily through the sale of stock. Another advantage is that many banks prefer handling loans with incorporated borrowers.
Ready for retirement. Retirement funds and qualified plans, like a 401(k), can be better to establish.
The cons of business incorporation
Corporations do involve some potential disadvantages, including:
Double taxation. C corporations are at the mercy of double taxation of corporate profits when income is distributed as dividends. This can be prevented by electing S corporation tax status with the IRS.
Ongoing fees. You must file articles of incorporation with the state, plus applicable fees. Many states impose ongoing fees-which are steeper for a corporation than for a sole proprietorship or general partnership.
More record keeping. Corporations must follow initial and total annual record-keeping requirements-which sole proprietorships, general partnerships and limited liability companies (LLCs) avoid.
An incorporated business (‘Limited Company’ and ‘Limited Liability Partnership’) gets the following advantages:
An incorporated business is the most accepted business organization the structure and established fact to the general public.
The owner’s liability is bound to the extent of agreed capital contribution to the business and ends once he pays agreed capital.
Protection of Personal Assets of owners:
As the liability of owners is bound, their personal assets are protected against the business enterprise risk as the company’s liability is not the liability of its owners.
Assets and liabilities of your incorporated business belongs to itself and don’t participate in the share owners. Hence, an incorporated business will continue to be around even if the dog owner changes.
Can sue and be sued
An incorporated business can be an artificial person created by law. Like any other person, it can sue and become sued prior to the court of law. This means that if an incorporated entity defaults, others may take legal action from the entity basically the business may take legal action against defaulters.