By: Myracle Stevenson
The question of when to incorporate your business is more important than why and how to incorporate it. At one point or the other, every business owner thinks of and considers incorporation as the next step for their business’s growth and development. Incorporation has its advantages which cannot be denied and ignored. It brings a lot of credibility and flexibility to your business. Once you are a separate legal entity you establish yourself as a professional business. This status of incorporation helps you to become more strong, professional and credible in the eyes of your customers and other stakeholders ultimately bringing success. Most importantly you can protect and safeguard your personal belongings because after incorporation you and your business are a separate identity. Hence, if any bankruptcy happens, the owner does not sell off his assets and belongings to clear off the debts. Incorporation also helps in getting loans and other financial support much easily because people have more trust and faith in the business. Furthermore, Incorporations helps to increase the life span of your business since it is a separate legal identity even after the death of the owner the company stays and does not die. Let’s look in detail when you should consider incorporating your business:
Incorporate as early as possible:
It is always better to incorporate earlier than late because the sooner you incorporate the faster you would be able to reap all the benefits that result from incorporation such as higher credibility in the eyes of customers, easier access to finance and loans, tax advantages and protection of your assets. This is true for all and any kind of business and something that the owners must take into account from the very beginning.
Incorporate before signing the contract:
If you sign the contract as a sole trader and later incorporate you still will be liable on your assets and your assets and belonging would still be at stake. It is, for this reason, it is extremely crucial to incorporate before you sign any contract, leases, agreements, and franchises to protect your assets and enjoy limited liability that results from the status of incorporation.
Incorporate before hiring Employees:
It is very crucial to incorporate before you hire employees in your business. This is because when you have not incorporated you are liable and responsible for the actions of your employees. This means if they make any mistakes you are responsible and your assets and belongings are at stake. However, once you incorporate you are no longer responsible and liable for the actions of your employees as it directly comes under the responsibility of the corporation.
Incorporate before adding partners:
Incorporating before adding partners and co-owners save and protect you from a lot of hassle and disadvantages of Sole traders and partnerships.
To conclude, the best time to incorporate is as early as possible as the above-mentioned information shows that the sooner you incorporate the faster you will be able to reap all the benefits of incorporation.