If you are about to start a small business, you have some major decisions to make. One of those decisions will have to be whether or not you should incorporate your business.
As in any business decision you will ever make, there are also pros and cons with business incorporation. Determining the structure of your company will have long-term ramifications, so it’s a good idea to do your homework and hire a professional help to make sure you are doing everything correctly.
When deciding whether or not to incorporate, the Small Business Administration has a handy checklist that can be used that can help to determine what your next step should be.
Some questions to ask:
- How large do you envision your business getting? Do you have dreams of employees and payroll, or is this going to be limited to a family-run operation?
- How much control do you want to have over the business?
- Do you want to leave yourself or your business open to lawsuits?
- What are the tax implications of your decision?
- What do you expect the profit or losses to be?
Once you answer these questions, you’ll have a better idea of whether or not you want a sole proprietorship or a corporation.
Most small businesses begin their lives as sole proprietorships. This means these businesses are owned by one person, who usually is in charge of the day-to-day operations of the business. If you are thinking of business incorporation, weigh both the positive and negative options to make an informed decision. You can also contact an attorney who specializes in business law to help you decide if business incorporation is the right step for your company.
