Every entrepreneur dreams of operating on the business idea he or she sees potential in. Yes, for a profit. However, it is not so as easy to set up one’s shop. There are rules and legal compliances to be met. Not only is it necessary to register your entity but it is critical that all the norms are met, for your functional ease. This organised legal entity or the so-called company that can possess property, sign documents and take legal actions.
Here is why you should register your company
- Limit liability of the owners
Members of a company are not personally responsible for the debts of the business under the company’s name. Thus, creditors cannot claim the personal assets of the members.
- Perpetual Existence
A company exists independent of its members. So, if a co-owner dies or wishes to sell his share, the company would still continue to exist.
- Advantages in the Income Tax
Companies often have many tax advantages such as savings on self-employment taxes, deductibility of various insurances like life insurance, health insurance, etc.
- Establish Credibility
Forming a company establishes credibility within the business circle. It is more prestigious and trustworthy.
- Easy to Raise Capitals
It is easier to raise capital in a company through the sale of stock or by borrowing money.
What are the challenges you will face?
- Corporation Formalities
Forming a company comes many responsibilities such as holding and documenting records, issuing shares of stock to the holders, organizing meetings of director and shareholders, etc. which needs a fair amount of management and skills.
- Recurring Expenses
Along with the fees paid during the inception of the company, there are many ongoing dues, such as filing an annual report, franchise tax, etc. from time to time. One needs some amount of money aside to keep it rolling in the business.