The benefits of forming a corporation or LLC can include: protecting assets through liability protection , tax savings, reducing chances of a tax audit, and developing a professional identity with customers.
What Do You Have to Lose?
What does this mean? It means that if your business experiences severe financial difficulties, creditors can take away your personal property such as your home, retirement savings, or any other asset you or your spouse own.
In our increasingly litigious society, it is becoming ever more important to limit your exposure and protect yourself from liability.
Incorporating your business draws a firm line between your personal and business assets, helping protect your personal assets from risks or debts associated with running your business.
Self Employment Taxes and Deductions
If you are operating as a sole proprietor, you will be required to pay self-employment tax on your profit, currently at 15.3%.
If you incorporate your business, only the salary you pay yourself is subject to self-employment tax. Depending on your situation, you may be able to save as much as 50% on your tax bill.
Hidden Benefit of Incorporating
Reduced Chance of Tax Audit
Sole proprietors tend to be more likely to file incorrect returns (many are self-prepared), and tend to underreport revenue or over report deductions.
For these reasons, the IRS has audited a much higher percentage of sole proprietor tax filings than corporate filings in recent years.
In tax year 2006, a Schedule C filer stood a 1 in 32 chance of being audited. For no business filers, the odds were around 1 in 124.
This means that sole proprietors are significantly more likely to be audited.
Build Credibility with Your Customers
Develop Your Professional Identity
Distinguishing yourself from the competition by establishing a professional identity helps increase credibility with your customers.
Most businesses choose to incorporate to prove their legitimacy to both customers and suppliers. Adding “INC.” or “LLC” after your business name gives you the credibility and professionalism that many customers are looking for.
In order to retain corporate existence, one must observe certain corporate formalities such as holding an annual meeting, taking corporate minutes, issuing shares and appointing officers.
Lawyers charge, on an average, over $200.00 per hour. With our document filing services, you know exactly what you need, what you are getting and how much it all costs from the very beginning.
You could file everything yourself, but when you consider the time needed to file, administer and maintain all the documents necessary to keep your business running legitimately, why would you? Rapid Document Services, Inc. offers you serious savings when it comes to your time and resources.
Once you decide to form your corporation, simply call us and we take care of the rest. Let us help you get it done, so you can get back to business! Incorporate with Rapid Document Services, Inc.