Many small business owners launch their companies as sole proprietorships in which they and their businesses are one the same. However, changing the format of a small business can offer a diapason of advantages for entrepreneurs.
The advantages of incorporation a small business include:
Personal asset protection.
As a sole proprietorship, your personal assets like your home, investments and personal property are completely exposed to a potential lawsuit. Opening S-, C- Corporation or LLC can help shield you and your shareholders from personal liability in the event of a lawsuit.
Small business owners take all profits out as salaries to avoid double taxation and state corporate income tax. Profits can be left in the corporation for further expansion of the business, and this could have tax advantages. If salaries and profits are structured properly, it saves thousands of dollars per year for you. If you use leasing assets (for example, your personal vehicle) for a corporation, it could reduce your overall tax liability also.
The IRS allows business deductions for ordinary and necessary business expenses you incur in running your business.
Here is a basic list of expenses you should be deducting from your taxes:
- Auto expenses (gas, oil, repair, etc.)
- Business interest and bank fees
- Business insurance
- Home office
- Meals and entertainment
Take in mind, some deduction may be not available to your small business. Consult with Tax Pro before claiming a deduction on your tax return.
Selecting the right type of a company for your business helps maximize your chances of financial and operational success. About this important step, please, take a consultation with us (800) 913-0809
Checklist how to set up U.S. company with us:
- Tell us about your business. We complete the form in 10 minutes
- Then we prepare all documents and sending directly with the Secretary of State.
- Decide on corporate name (choose several names for, we should be sure your name is unique)
- Enter valid address in the State. Do you need one? We provide address in the State of Illinois (some businesses need it)
- Enter your first name, last name and valid SSN
Do not have SSN? You can start a business without SSN! Provide us your ID only (for example, your passport).
- Pay fee (it depends from State, were you are starting your business)
When your corporation’s documents have been approved by the Secretary of State and the IRS we will let you know about your corporation opening by email. If you prefer to get paper documents, we’ll send you them by mail.
Congratulations! You are business owner!