It doesn’t matter whether you are planning to start a business or you are operating for some years, it is a good idea to incorporate your business. There are many advantages and disadvantages that come along with it, but if you want your business to grow substantially it is a good idea to incorporate and save a lot of trouble.

Here are some reasons why you should incorporate your business:

Enhanced credibility of the company:

Incorporation enhances the company’s stand in the market and makes it a reliable partner to deal with. Customers and vendors feel more confident while working with an incorporated firm. This credibility also helps the company to get capital easily, as lending institutions trust incorporated companies.

Limited liability of the owner or shareholders:

This feature of a corporation limits the liability of the owners or shareholders of the firm. In simple terms, you won’t have to risk your personal assets if your company is in debt or has some liabilities. However, in sole proprietorship and general partnership, personal assets can be sold to pay debts.

Tax savings:

A corporation is a separate tax-paying entity. Its owners or shareholders pay tax separately. There are different policies for “S” and “C” class corporations. A normal LLC doesn’t have to pay corporate tax. Corporations get tax advantages that include deduction of health insurance premiums paid on behalf of an owner-employee; savings on self-employment taxes; and the deduction of other expenses including life insurance.

Independent life of the corporation:

A corporation has its own life which is independent of its owners. The owner(s) can move out or sell as per his or her wish. The company will sustain even if the owner passes away. The owner can even transfer the rights of ownership to somebody else.

Easy to go public:

If you wish to make your company a public owned company, then you have to make it a corporation first.

There are several disadvantages of incorporation too, these include:

1. Business corporations must follow certain methods of operation as laid down by the government
2. Since the company pays taxes as well as its owners there is a kind of double taxation
3. All strategic business decisions must be agreed upon by the board of directors
4. Corporations have to maintain proper documentation and follow set formalities like holding annual meeting and documenting the minutes of the meeting, etc.

But as compared to the advantages, the disadvantages are not so prominent. If you are looking to safely and securely grow your business then incorporation is the way to go.