By Deborah Sweeney
If you haven’t picked a business structure for your business, it’s never too late to take steps to protect your personal life and your business. Our guest blogger today is CEO of MyCorporation, Deborah Sweeney.
Before the clock strikes midnight on February 14th, there is one thing you should accomplish: incorporate your company. When you incorporate or form an LLC, you are truly showing love to your business.
Incorporating or forming an LLC helps small businesses save on taxes. Business taxes and personal income taxes are charged at different rates so in many cases, recording the income of the business might push the sole proprietor into the next tax bracket, resulting in a higher tax liability. Incorporating your business will avoid the taxation on your personal income tax return and allow you to avoid this extra taxation.
In addition, starting a new business often involves raising money from investors. Having a business structure (corporation or LLC) enables you to offer an interest in the business and allocate shares or membership. In 2011, investors will see an increase in the taxation rate on capital gains they pay on money earned as an investor in a business so finding investors now will be easier than in the next few years. Choosing the right incorporated business entity will also allow your investors to use your net operating losses on their own personal income returns, encouraging investment in your start-up business.
Separating personal assets from those of your business is critically important to protect personal assets from the risks and potential liabilities of running a business. Forming a corporation or LLC establishes a corporate shield between you and your business – thereby protecting you and your family.
In addition, incorporating now will allow you to take advantage of the Small Business Jobs Act of 2010. The Act provides for numerous small business tax breaks, including doubling the annual deduction allowance for new and used property assets, increasing the deduction for entrepreneurs’ start-up expenditures, and creating deductions for cell phone usage and health insurance costs. The Act also created a new $30 billion small business lending fund and improved state small business programs better, providing small businesses with better access to financing. This program currently only applies to the 2010 and 2011 tax years so incorporating now is important if you want to take advantage of this program.
This February 14th it’s easier than ever to Love Your Business. MyCorporation.com will help you in that endeavor by waiving its service fees on Valentine’s Day. There’s never been a better day for a business to get incorporated!
Deborah Sweeney is CEO of MyCorporation Business Service, Inc., and an advocate for protecting personal and business assets for all consumers. Sweeney has long served as a speaker and panelist on legal issues affecting new to the world and growing businesses.