The word "corporation" may conjure up images of tall, gleaming skyscrapers, vast boardrooms and stock buyouts on crowded trading floors, but any business can be incorporated. The question is: Is it the right decision for your business?*
Why Incorporate a Business?
Business owners may decide to incorporate for numerous reasons, including:
Reduced liability: Since a corporation is viewed as its own separate entity, it protects you from corporate debts and other financial obligations in some cases. Also, unlike in a standard business arrangement, your personal assets would likely be protected in the case of a lawsuit.
Potential credibility: You may also incorporate in a bid for credibility, as adding "Inc." at the end of a business name can appeal to consumers and potential business partners for the professionalism it conveys.
"Some business owners are left with the impression they have no choice but to incorporate."
Raising money: Finally, you might incorporate to obtain funding. Many lenders will not make business loans available to sole proprietorships, leaving some business owners with the impression they have no choice but to incorporate.
Weighing the pros and cons of business incorporation
Unfortunately, the potential benefits of incorporating your business come with costs, such as:
Expenses: First, corporations cost much more to create than sole proprietorships or partnerships. This is because corporations involve formation fees, filing fees, annual state fees and more.
Difficulty: Additionally, corporations are simply more time-consuming to manage. There is more complex paperwork to fill out, as well as strict federal and state guidelines to follow. You must also hold annual meetings for shareholders if you incorporate your business.
Forming a corporation means contending with numerous rules related to compliance.
Don't Incorporate for the Wrong Reasons
Another factor to keep in mind is that some business owners incorporate because they believe they have no other choice. This is especially true in the case of individuals seeking business loans.
For example, many business owners assume the only way they can obtain the funding they need is by undertaking the expensive and often-complicated process of incorporation. However, unlike most lenders, the form of the business has no bearing on eligibility at LoanMe. Whether you have a corporation, sole proprietorship or partnership, LoanMe can provide you with business credit.
Our business loans are suitable for all business types and can save you on both time and money. Apply online 24 hours a day to receive an instant decision. You can receive your money in as little as one day after choosing from various loan options that allow you to see all costs upfront and feature no hidden fees.
*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice. Credit approval is subject to LoanMe's credit standards, and actual terms (including actual loan amount) may vary by applicant. LoanMe requires certain supporting documentation with each new application. If you have any questions regarding this, call us at 844-311–2274. California loans are made pursuant to LoanMe's California Department of Business Oversight Finance Lenders Law License #603K061. LoanMe also offers loans in certain other states which may have higher minimum loan amounts. Copyright © 2017 LoanMe, Inc. All rights reserved.