The word “corporation” comes from the Latin word corporāre, which means “to form into a body.” So in the eyes of the law, a corporation is one body. Corporations are also one of the longest-standing business structures, and this is for a reason. The success and benefits associated with running a corporation make this business structure attractive to entrepreneurs, big and small alike.
If you want to turn your business in Utah into a corporation, we present to you the benefits you’ll get by doing so.
For Small Enterprises
Most small businesses start as a sole proprietorship. The problem with this structure is the lack of distinction between you and your business. So, if your company has debt issues, creditors can come after your personal finances to cover your business debts. If your company is incorporated, however, you’ll be protected from personal liability for business debts.
Another reason incorporation is beneficial to small business is the fact that it’s easier to raise capital. Being incorporated adds legitimacy to your operations, so lenders are more inclined to loan out capital. What’s more, the clear distinction that incorporation creates between you and your business makes it easy to determine and provide business-specific finances that most lenders ask for.
As a small enterprise in the Beehive State, though, you have to remember to talk to a business lawyer in Utah before diving headlong into incorporation. There are many nuances to this move that experts can shed light on by personally talking to you.
For Large Enterprises
Incorporation offers strong protection for large companies, especially those with many shareholders. For instance, your corporation will pay for its own taxes and properties, and, in the event of a lawsuit, you and your shareholders are afforded a degree of protection.
The tax benefits of corporations are also better than if your business remains under sole proprietorship or partnership. For example, in the new Tax Cuts and Jobs Act, C corporations have a flat 21 percent tax rate, while pass-through businesses, such as partnerships, have a 37 percent rate.
Many large enterprises compensate their employees, vendors, or contractors by granting them stock options or the opportunity to purchase equity at a lower price. While these agreements can be drawn without incorporation, it’s better to make these kinds of offers when you’re already a corporation.
For All Types of Businesses
Whether you own a big or small company, there may come a time when you need to sell it. When that day comes, you’ll obviously be after the best offer. Being incorporated helps secure that for you.
In the world of business, sole proprietorships or partnerships look less attractive to buyers. Being incorporated gives you the leverage you need when it comes to negotiating an offer, not to mention it will give you a leg up on non-incorporated competitor businesses also looking to sell.
Finally, one of the most practical benefits of being incorporated is earning the trust of people you do business with. Generally, partners, vendors, and especially customers, have more respect for businesses with “Inc.” or “LLC” at the end of their business name.
All these show that incorporating your business enables you to enjoy several financial and operational benefits, as well as makes you appear more professional. By turning your business into a corporation, you’re ensuring the enduring health and success of your company.