|Top 5 Reasons To Incorporate Your Arizona Business|
1. Peace of mind.
Given all of the challenges that exist for Sole Proprietors that we’ll discuss in this article like – unlimited personal liability exposure, higher taxes, lack of options for structuring their compensation, lack of credibility and potential death of business, the simple act of incorporating can provide you with a tremendous peace of mind that your business is proactively working for you as you generate your wealth.
When you set up an LLC or a Corporation, your personal assets (such as your home, your vehicle and your savings account) are protected from your business obligations and liabilities. If you are a Sole Proprietor operating a business, then your personal assets have unlimited exposure to satisfy your business liabilities. You work hard in your business to generate more personal assets – make sure you are protecting them at the end of each day!
3. Tax Benefits.
An LLC or a Corporation can deduct business costs and benefits to reduce its tax liability. Additionally, as a Sole Proprietor, 100% of your earnings are subject to self employment tax. As an LLC and a corporation, you have more options for compensating the owners and those options can have a significant impact on reducing their taxes and increasing the individual’s take home pay.
When a business has a company designation after its name, such as “LLC” or “Inc.”, the business instantly has more credibility. The public perceives an incorporated business as being more established, professional and serious about its business. Whether this is an accurate assessment is another story. But remember, perception is reality!
5. Continuity of life of business.
If you operate your business as a Sole Proprietors, it’s a sad fact that your business dies when you die. An LLC or a Corporation can continue in existence after an owner dies – the business can be inherited by family or a third party and they can continue to operate the business.