Business ventures in the modern era must study carefully the pros and cons of the
different kinds of businesses such as the corporation type before sailing out its high seas. Incorporating ones business or company offers many advantages than disadvantages. However, it is also essential to strategically use the following advantages for the growth of the business.
Some of the many advantages of incorporating a business are:
It is easier to raise capital by selling out stocks and equity interests to individuals or entities. By selling stocks, the company is able to raise operating funds for the growth and development of the business venture.
The death of its owners does not affect the growth and development of the business. Meaning the business could go own even after the death of its major stock holder thus preventing family squabbles which could result to the eventual downfall of the business.
Owners and stockholders have limited liabilities when it comes to company debts because they are not personally held responsible for the debts owed by the business. This gives the owner a certain kind of protection when it comes to personal assets and properties.
Incorporating your business means the company will pay lower taxes and may not pay social security or other worker's compensations. Lower taxes mean more savings for the company. This makes corporations more profitable than any other kind of business because the business becomes a separate entity with separate rights and the stocks and profit are divided equally among its shareholders and owners.
Another large advantage for those small business owners out there is the fact that the $500,000 capital gains exemption available for sale of a small business can only be claimed by sale of shares of a qualifying corporation and not that of a sole proprietorship or a partnership. This means that if you have not incorporated your small business that capital gain that you could have received will simply vanish before your eyes.
Corporations can also deduct business losses which can be carried back 3 years and forward for 15 years. They can also save by introducing retirement plans and other matching programs for employees.
The smooth functioning of the business is owed to the adoption of modern management systems through central management techniques which aims to ensure the efficiency of administration strategies allowing the constant growth and development of the business and make it more adaptable to change. The transfer of ownership is also easy when companies are incorporated by transferring stocks from one owner to another.
Investors and financial institutions also prefer to buy stocks from corporation than in business partnerships or sole proprietorship run business because investments are more secured.