Why Incorporate A Business | How to Start You Own Business | How to incorporate

You might be thinking, my business is running fine. I have no problems. How do I incorporate? Why should I incorporate? It is just an added expense. It's just attorneys and CPAs trying to collect an extra fee. What are the real benefits of incorporating? Would those benefits help me even though I operate a small business?

Protect Your Assets

In this day of quick business activity, high volume transactions and sue happy plaintiffs, it is imperative that anyone who operates a business, should incorporate for the sole reason of protecting their personal assets.

Operating your business as a corporation or as a limited liability company can protect your personal assets (i.e. your home, other real property, bank accounts, wages, and other personal assets). If you or an employee intentionally or negligently makes a mistake, while operating your business, the injured party has a right to seek reimbursement from your personal assets if you are operating as Sole Proprietorship or a Partnership.You will have no protection against the lawsuit. You can lose it all.

Defending a lawsuit can easily cost you $20,000 to $50,000. However, if you were operating as a corporation, you might not even have to defend the lawsuit. Thereby, saving you thousands of dollars. They cannot go after your home, your bank accounts, your wages, or any other personal assets.The corporation will protect your personal assets and will give you the opportunity to switch to a new corporate entity to run all future work so that your accounts receivable will not be at risk from the lawsuit.

Protect Against IRS Audits

Another advantage of incorporating is to avoid IRS audits. If you are operating under your own name or a DBA, then by law you must complete and submit a Schedule C with your tax returns. The IRS audits Schedule C Tax Returns four times more than any other type of Return.

The IRS views a Schedule C company as a smalle business that is more likely not to hire accountants and attorneys for their daily business transactions. Without professional guidance mistakes happes and turn into money owed the IRS.

Corporations have lower risk of audit. Also operating under a corporation avoids approximately 40% of a payroll tax liability, if your business gets behind on its payroll tax.

Former clients owed the IRS $100,000 in payroll tax, but because they were a corporation they only had to pay $42,000. If they didn’t operate as a corporation, they would personally be liable for the complete $100,000!

Operating a corporation can easily save you thousands of dollars. This is the slight overview of benefits in using a corporation for your business.

Contact Terrence J. Moore, Esq., LL.M., at Moore & Affiliates, PLC at (714) 541-2500 for additional information regarding incorporating or other business issues. Terrence J. Moore, Esq., LLM, emphasizes Tax and Business law and is located in Orange County with clients all over the Country.

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