1. The primary benefit of incorporating is to protect
your personal assets from potential liabilities that
could occur in your business. Without the protection
provided by a corporation, creditors or other
claimants of your business can attach personal
assets including garnishment of personal salary,
attachment of personal bank accounts, attachment
of your home in most states, and seizure of other
personal assets,. If you are operating as a sole
proprietorship or as a partnership your personal
assets are vulnerable. By forming a corporation and
following all corporate formalities, you insulate
yourself from personal liability. The only amount you
have at risk is property and investment that you put
into the corporation.
2. Another benefit incorporation is that it offers
continuity of existence. A corporation is a separate
legal entity that has a separate "life" from its
individual owners. Upon the death or retirement of
an owner, the corporate entity can continue on.
Shares of ownership may transfer upon death or by
sale. But the business entity will continue in
existence until it is dissolved.
3. It is next to impossible to raise capital investment
through a sole proprietorship or partnership. If your
business is considering investment capital, it is
necessary to do so through a separate legal entity.
Investors tend to shy away from partnership
investments because of a risk that their personal
assets will be subject to the liabilities that may
arise from the business in which they are investing.
4. There are also potential tax advantages to
operating through a corporation which you may
wish to discuss with your accountant.
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