After you have decided the name of the company, you would like to transform your company into an incorporated entity from an individual proprietorship status. Here, you would have confusion whether to make your company a Corporation or Limited Liability Company. This is a crucial point that can decide the success of your company. Before taking a decision, you need to consider a few things such as the quantity of paperwork, tax benefits, individual liability and the way to generate capital. You should be aware of the fact that each type of corporate entity will have its own set of advantages and disadvantages, which you should analyze thoroughly to find the suitable one for your company.
No matter what kind of incorporated entity you have decided to choose, it is crucial to be aware of the benefits that your company will receive by becoming a business entity. Now, let us look into some of the main benefits.
The first and foremost benefit of making your company a corporation or LLC is the asset protection. When your business becomes an incorporated entity, your assets are separated from your business. It means, if your company faces any debt or financial problems, your assets will not be liquidated during the debt recovery process initiated by the government.
Another important advantage is the tax benefits. By becoming an incorporated entity, you and your business would enjoy various tax benefits, which are available to a sole proprietor. Your business would also earn more credibility from the customers, vendors, clients and other business partners by becoming an incorporated entity.
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