The decision to incorporate or maintain your sole proprietorship is one that should not be made lightly. There are a number of advantages to both. And, the advantages really depend on what your unique business and personal needs are.
There are four important things you should consider in your decision to incorporate or not:
- Liability. As a sole proprietor you could suffer a great personal loss if your business is ever sued. Incorporation offers a shield that protects your personal assets in the event your business is ever taken to court.
- Taxes. Corporations usually pay taxes as lower tax rates.
- Investment. Are you looking for investors? The availability of corporate stock makes winning investors easier.
- Cost of establishment and maintenance. Sole proprietorships are less expensive to maintain than corporations. Corporations must pay filing fees and annual registrations with the state.
Be wise in your decision. Get expert advice from your accountant or attorney when making this decision.