- $ Limits Personal Liability
- $ Tax benefits
- $ Shows that you are seriously committed to your business
- $ Offers a more professional appeal
- $ Corporations don’t need a passport
- $ When formed correctly offers asset protection
Another reason to form a corporation is to raise capital and additional lines of credit. I not only think this is one of the best reasons but, the most underrated and misunderstood reason.
This advantage applies to all corporation entities:
- $ Corporation – C Corp
- $ Small Corporation - S Corp
- $ Limited Liability Corporation – LLC
- $ Limited Liability Partnership - LLP
*Strategies and State laws may vary.
Corporations are called entities for a reason. They are treated separate from the individuals that form them. The Ein or Tin is how they are identified by the state government and the IRS.
What does this mean to the average person? You know the advantage of having two people in a house hold with exceptional credit (increases lending power and leverage). A person or persons may increase their lending power forming a corporation. Of course it is not that simple. There are many things that must take place before a Corporation is credit worthy. Proper business practices and credit structuring must take place before an investor or a bank will begin to look at a corporation as viable credit risk. The principle to obtaining good credit in a corporation is the same as obtaining good credit in one’s personal life. The laws and the strategies slightly differ but, with the right information and circumstances an individual can go from being a borrower to a lender.
Always consult your tax attorney, accountant or tax professional before venturing out to form a corporation because different corporations fit different business types.
