Benefits of a Corporation
1. Liability.
Structuring your business takes the liability away from you and your family. This new entity creates a new identity that becomes responsible for the liability. Corporation or LLC signs leases, borrows money, and buys goods and services on credit - you’re not personally liable.
2. Tax Advantages
Take what would otherwise be non-deductible personal expenses and turn them into legitimate deductible business expenses. Use of motor vehicle, use of part of your residence by the Corporation with the utilization of a lease not considered a "home office", and have Annual meeting of shareholders and directors in far away or "resort city" and deduct for taxes. The goal is to convert as many non-deductible personal expenses into legitimate deductible business expenses.
IRS Form 1040, Schedule C (Profit or Loss from a Business) which is used by sole proprietors to report the businesses income and expenses is the target of many IRS audits, however, compare this to the audit rates of similar businesses that have incorporated or established multi-member LLC and the audit rate is almost NIL
3. Privacy
The Corporation or LLC can be established in such a way so that shareholder/owners remain anonymous, many times the same anonymity can be accomplished for officers and directors.
4. Marketing
Doing business with a corporation or an LLC, places everyone involved on a higher professional level. It gives the business the appearance of being much bigger than it is, and it attracts investors more easily.
5. Raising Capital
Because of the ease of transfer of ownership and the "separate entity" concept of the Corporation or LLC, it is much easier to attract investors.
6. Transfer of Ownership
Put real estate in Corporations or LLCs and transfer through private agreement, such as stock transfers rather than formal real estate transfer and closing. You can re-title the asset to a Corporation or LLC yet continue to maintain control.
7. Minimize IRS Audits
Sole proprietors must file an IRS Form 1040, Schedule C (Profit or Loss from a Business). Unfortunately, the IRS audits sole proprietors that file the form at a higher audit rate than returns for an incorporated micro business. Also, sole proprietors with home office deductions face even more risk of audit by filing the IRS Form 8829 (Expenses for Business Use of Your Home) for home office deductions. S or C corporations avoid such scrutiny.
What Corporations Can't Pay For 1) Mortgage - but it can pay rent 2) Food 3) Clothing. Your Corporation Can Pay For Everything Else |
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