You are wondering as a new business owner, if whether it's worth the time and money to incorporate your business. Your friends and business colleagues are encouraging you to exploring the idea of incorporating your business. Incorporating your business is an important decision if you are looking toward expanding your small business in any way, shape, or form. In most occurrences, incorporating your business is an excellent idea for several reasons.



First of all, when you incorporate your business, some liability protection is obtained. Secondly, if your business runs into the problem of the inability to repay a debt, not only do the creditors go after the corporation itself, but if the corporation does not have the money to pay the creditors, then the creditors will not be paid. That may even include if the shareholders who may run and own the corporation have money. These are the top five reasons as to why you should incorporate your business are:

Credibility- When your business is incorporated, other businesses take your company more seriously. This is especially important if you are dealing with affiliate programs or other companies. Some companies will not issue a 1099 form unless you are an incorporated business. This shows that you are serious about your business, and that it's past being just a hobby.

Health Insurance- As many small business owners know that the costs of health insurance premiums are expensive for individuals. When your business is incorporated the cost of health insurance is greatly reduced due to corporate rates. Furthermore, incorporated companies are not required by health insurance agencies to individual physicals to determine coverage. You could be entitled to corporate insurance rates as long as you have a group of two or more employees.

Liability Protection- Incorporating your business can protect you and your personal assets from any attachments in certain types of judgment. The amount of protection your business can receive will vary by state and entity. This does not mean that if you incorporate your business venture, that you are at free will to do what you want and escape any liability all together. However, many corporations will allow some security against liability as long as you follow corporate formalities.

Enhanced Image- When a small business incorporates, the abbreviation Inc at the end of your companies name will give the business a sense of establishment in the corporate world. Other companies look at incorporated businesses, especially micro businesses more credibility than a venture that's unincorporated.

Tax Benefits- There are some tax benefits that your business will acquire when incorporated. You may have to pay less on social security tax if your business is incorporated instead of being a sole proprietor. The chances of being audited by the IRS are less than those who are considered sole proprietors. This is because the law considers your business a separate person from the individual. However, you are still required to pay any personal taxes along with corporate taxes your business generates during the year.