Some entrepreneurs have reservations about incorporating their businesses. Incorporating a business means more responsibilities and it could add some tax burdens for businesses in the early stages of operation. Still, incorporations’ benefits outweigh its drawbacks, according to Entrepreneur magazine.For one, incorporating a business makes it easier to raise investment capital. Entrepreneur magazine says investors are more attracted to corporate entities because of limited liability and easy share transfers.
The transferability of shares, in and of itself, is another top reason the source says incorporation is best for small businesses. Transferring business ownership requires retitling, drawing up deeds, and other administrative steps for even the slightest changes.
With a corporation, ownership is equivalent to the shares of stock an individual owns. Shares can be sold without the cumbersome and costly processes usually associated with non-incorporated businesses.
Incorporated businesses also have the benefit of unlimited life, says the source. While proprietorships depend on the participation of a single individual, a corporation can theoretically live until it accomplishes its mission or merges with another business.
Entrepreneurs interested in learning how to incorporate their businesses can turn to professionals at an incorporation service.