Protect your personal assets
The main advantage is that incorporation, if done right, can protect you and your personal assets from the debts and legal liabilities of the business. In other words, incorporation helps separate your private finances from the finances of the company.
In order to get this benefit however, you need to follow the formalities of incorporation and to make sure that you run the business as a separate entity. This includes taking steps like:
- Creating a separate bank account and credit card.
- Using only company funds to pay for company purchases and services.
- Documenting Board Meetings and decisions (C Corporation).
- Incorporating the business may also offer tax benefits like deductions for health insurance premiums and other business expenses. You may want to discuss these benefits and options with a tax professional.
Raise funds, employee incentives
- Incorporation creates a legal structure for you to sell portions of the company and to get investment in a variety of forms. You can also offer stock options (C corporation) as incentives to attract top talent to your company