ready to incorporate · 4 reasons you may need to incorporate limited liability need to raise money...
TRANSCRIPT
Are You Ready to Incorporate?
4 Reasons You May Need to Incorporate
Limited Liability
Need to Raise Money
Extremely Profitable
Time to Retire
You Need Limited Personal Liability
• Sole Proprietor
• No legal separation from business
• Personal Assets not protected from lawsuits and debt
• LLC’s, S Corps, & C Corporations
• Limited personal liability for debt & lawsuits
• Only liable if personally guarantee a loan or personally injure or negligent
Need To Raise Money for Business
• As a Sole Proprietor:
• Unable to sell interest or shares of business for equity
• Have to pledge personal assets for loans
Extremely Profitable
• As a Sole Proprietor:
• Net Income subject to payroll and income tax
• Pay the full 15.3% of Social Security & Medicare Taxes
• As an S Corporation:
• Can reduce taxes
• Pay a fair salary to owner (shareholder)
• Pay as Distributions (not subject to payroll taxes)
Time to Retire
• As a Sole Proprietor:
• Can’t transfer or gift part of the business
• Business dies along with you
• Becomes part of the estate
Ready to Incorporate?
Contact your CPA or Attorney to start the process and discuss your specific situation