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4 Top Reasons Why You Should Form a Corporation

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4 Top Reasons Why You Should Form a Corporation

Small to medium enterprises can help you with your retirement plans, but sometimes these do pose more risks than having a corporation. SMEs, especially those under sole proprietorships or general partnerships might not even exist as long as corporations.

Know that incorporations and LLCs are the longest standing business structures as they lead the pack in the number of flexibility options and protection for its shareholders. In this post, we take a look at some of the top reasons why you should start forming a corporation for the benefit of your business.

Reason #1 – Flexibility of Ownership 

When you’re about to have a C Corporation, then you’re going to have the benefit of having great flexibility of ownership. In this business structure, shareholders can be foreign or domestic individuals. Other legal entities or corporations can even own a stock from the business. Shares acquired from the corporation can be held in a trust fund, a partnership, or any other legal tool. To put things in perspective, almost anyone and even anything can become a shareholder of a C Corporation. In doing so, it’ll help the business in seeking partners and sources of capital that other business structures couldn’t do.

Reason #2 – Income Splitting 

Before we move forward, note the C Corporations can set any date of the year as their fiscal-end date whereas S Corporations will have, by default, have an annual fiscal year end date of December 31. This amount of flexibility in a corporation will bring about new opportunities to financial management options as you can save money from the business on taxes as you move the income among different entities from one tax year to the next. Furthermore, you can use the corporation to make your money work in your favor, thus letting you have a better chance of retiring with absolute peace of mind as compared to being in your senior years and you’re still worrying about money.

Reason #3 – Perpetual Duration 

Corporations, whether S or C, will have perpetual existence. It means that unlike other business structures, incorporations and LLVs won’t cease to exist in the event of a bankruptcy or when one of its owners die. If such events do happen, the life of the corporation continues. Note that the oldest corporation to ever exist is the Hudson’s Bay Company, and the business was formed back in 1670.

Reason #4 – Credibility 

When a business becomes a corporation, you now gain instant credibility. The business becomes viable when the business is known and filed as a corporation. Hence, you are more attractive to the eyes of creditors and investors as compared to having a business under a general partnership or sole proprietorship. Furthermore, that “Inc” or “LLC” in your brand’s name is a factor that demonstrates credibility.

This list is by no means extensive and there are plenty of other reasons why you should start upgrading your business into a corporation. If you need help in that regard, you can seek assistance from https://windsorcorporateservices.com/choose-llc-order-package/.