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Benefits of Corporations

There are various advantages associated with corporations. One of the main advantages of corporations is that they have limited liability. All shareholders are usually provided with limited liability protection when in corporations. The debts and liabilities of the business does not affect shareholders in any way. If the business delays in paying the debtors, the personal property of shareholders is never used. This is not the same to those companies that are not corporations. In a business with no company formation, the shareholders are usually responsible for paying the debts of the business if the business delays.

Enjoying tax benefits is an added advantage of corporations. The deductions of health insurance premiums is one of the tax benefits you will enjoy. These are usually the premiums that paid so that shareholders and employees don’t have to pay them. This means that the income they earn and their savings that apply to self-employment taxes will not be taxed. There is also no taxation for compensation for workers and medicare taxes. This is why it is advisable to make your business a corporation. Another tax benefit you can enjoy from a corporation is that dividends and capital gains are exempted from taxation. You can also hire a tax advisor if you want to understand all the tax advantages you will enjoy as a corporation.

Another advantage of corporations in is that they establish credibility. This is because potential customers and vendors will start trusting your business more. Company formation will also help your business in unlimited life. In a corporation, you can pass the ownership from one person to another. The life of your business will be dependent on the owner of the business. After becoming a corporation, you will be able to enjoy the features of unlimited life. When the owner of your business sells his interest, your business will still remain in operation.

Enhancing the transfer of ownership is an added advantage of becoming a corporation. You can gain ownership after becoming a corporation. An added advantage of corporations is that they are easy to raise capital. When you need to raise money for various reasons you can do it easily when you are a corporation. You can just sell stock in this case. You can also go ahead and sell shares or issue bonds to raise capital. When banks are giving loans they tend to consider companies that are in an incorporated business. You can also be able to develop retirement plans easily after company formation. Another advantage of corporations is that profits and losses are shared through to all the shareholders. This is because corporations don’t pay income taxes. In conclusion, as a corporation you will be able to enjoy all the above benefits.

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