Should I incorporate my business?

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There are many businesses that, according to state and federal governments, aren’t businesses at all. This is because they have never incorporated their business. If you’re asking, “should I incorporate my business”, we’re going to help you find the answer. Here are four reasons to incorporate your business:

Limited Liability

Right now, your business is you. This means that if you damage somebody or their property in any way, you may be sued and you may put yourself and your family at financial risk. You may have to pay the damages out of your own pocket. When you form a corporation, your business becomes a person or entity of its own. This separates the business from you. If your company is sued, your company could still incur damages but incorporation means that you won’t be personally liable providing you’re running the business as a separate entity. An accountant can help you with this.

Separate Credit

Up until now, your business has relied on your credit profile to apply for credit cards or loans. If you’re in need of financing, the answer to, “Should I incorporate my business” is definitely Yes. Also, if your business runs in to financial difficulties and bills aren’t paid on time, your personal credit isn’t affected.

Tax Benefits

There are tax benefits to incorporated entities and sometimes those tax benefits are quite large. As you know, your tax professional knows your business well and they can advise you on the tax benefits available to you. Keep this in mind, though: The cost of incorporation will probably pay for themselves if you qualify for these tax benefits.


When a business has those letters behind their name, they just seem more credible. When you see LLC or Inc, something about it just makes you feel more comfortable. Of course, there are many unincorporated businesses that are just as credible as an LLC but if you can gain an edge by incorporating, it may be worth the time and expense for that reason alone.

Find Investors

If you’re a sole proprietorship, investors won’t give you a second look. You’re not a company yet and an investor can’t sell a share of something that isn’t a company. If you are looking for investors, you must incorporate.

The answer to, “should I incorporate my business” is most likely yes unless it is so small that the income generated from it isn’t enough to outweigh the benefits. If you choose not to incorporate, don’t forget about your personal legal liability.