Choosing The Right Business Structure
Any business can become successful with a tinge of luck and loads of hard work. However, businesses would continue to remain successful only when a proper thought process is put in terms of deciding the right structure that suits your business.
Today’s business environment is highly competitive and it will only get even more competitive in the years to come. In such times, the structure of a business could be the one reason that differentiates the business’s success from failure. Choosing the right business structure is at the top of the list of tips that could lead to a successful business for any entrepreneur.
There are several forms of business structure such as Proprietorship, Partnership, Corporation, Private Limited Company and Public Limited Company. However, of all the various forms of business structure available, Incorporating seems to be the one of that comes inbuilt with a lot of advantages and money-saving options. The following are some of the various advantages that the Incorporating form of business structures holds in the offing for an entrepreneur.
- Ability to save tax – Incorporating involves creating an individual and independent business entity. This offers you the option of channelizing various transactions between you and your business thereby creating a potential to save huge sums of money that would otherwise be paid to the government towards various taxes. For instance, assuming that you own a commercial building, you can rent this to your corporation and in turn claim deductions and depreciation expenses on the same. Moreover, your Corporation can also show rental expenditure in their Income Expense statements. This is not possible when you enter into other forms of business structures.
- Increased Credibility – A company name with a Inc or Corp suffix earns more respectability in the market than firms that do not enjoy this luxury. Almost 9 out of 10 people feel more secured to carry out business transactions with a Corporation rather than other forms of businesses.
- Protection of Assets – During instances of debts or God forbid – bankruptcy your personal assets are in a greater risk in case the business structure that you own is a Proprietorship or a Partnership firm. However, in case your business structure is that of Incorporation, it is only your investment that falls under your responsibility and hence your personal assets are protected.
- Higher resale value – Corporations manage to garner higher resale value than other forms of business structures. Moreover, this form of business structure is also comparatively easier to sell than the other forms of business structures.
- It is private and confidential – When you are involved in a business structure that is corporate in nature, your personal identity along with your business affairs are very well protected. There are also certain states that offer to protect the privacy of corporations and shareholders alike.
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