As a small business owner, you have a lot of options when it comes to business formations. Sure, you can operate as a sole proprietor and save yourself a little paperwork on creating a corporation, but what about all of the benefits you are missing out on? Here are 5 reasons to incorporate your small business in California.
- Liability Protection – Incorporating helps to separate your personal and business finances. If the business goes under and defaults on a loan, you don’t want the bank coming after your personal home or car to recover their loss.
- Tax Benefits – As a sole proprietor, your earnings are subjected to a self-employment tax of 15%. That’s on top of income tax. Corporations are structured differently and may be able to provide you with some significant tax benefits.
- Save for Retirement – You can start an IRA, even if you don’t incorporate. However, there are additional ways to save for retirement as a corporation that will benefit you in the long run. For example, you may have higher annual contribution limits or be able to have the company match what you put into a 401(k) from your personal earnings.
- Create a Legacy – A sole proprietorship usually dies with the owner. By forming a corporation, you can create a legacy for your family that allows for profits that extend long after you are gone.
- Retained Earnings – This is a way to invest in your business with it coming from the company rather than from your pocket. That means you don’t get stuck paying taxes on cash you are just sinking back into your business venture.
Corporate Lawyer Benefits – Small Business Prices
If you want the benefits of an experienced business lawyer in the San Diego area but are on a small business budget, then Pokala Law is the firm for you. We’re a small business too, so we know what it is like to require high-quality services that are still affordable. To learn more about what we can do you for you, call 1-844-695-1487 or fill out our online contact form.