The process of incorporating essentially means filing documents for a business so that it becomes a corporation.
A corporation is an organization, such as a company, which has been lawfully recognized and approved by the state to act as a single entity.
By undergoing this process to incorporate a business, the holders of the company are recognized as being legally separate from their investment and the business itself.
Having a blog business does not always mean that you are making money out of it, but when this starts to happen, people may often start advising you to incorporate your business.
There are both advantages and disadvantages to doing this, although it can be very beneficial.
In this article, we will provide you with six good reasons why bloggers should go and incorporate their work, in the case this is something you are considering doing for your business.
1. Limited Liability
When someone builds a business, more often than not they put their own personal financial situation at risk and may use their personal assets to solve any financial issues that may arise.
One of the main reasons to incorporate your blog business is that it reduces your liability when it comes to personal financial strain potentially caused by the business.
This is essential so that you protect your assets. For example, when a business becomes a corporation, you are no longer held accountable for any debts of the company.
If the company develops a debt or gets sued for any reason, your personal assets will be protected due to incorporation.
2. Increased Legitimacy
By incorporating a business, you automatically boost the legitimacy of your company. Customers, suppliers, and potential investors and partners usually view corporations and better established and stable than unincorporated companies.
The blogging experts at Fat Stacks suggest reading expert blogs on incorporating your business is a smart move if you want to increase your knowledge in the field and undergoing this process with your business.
By incorporating your blog, others will perceive your business as more stable and legitimate.
Additionally, the incorporating process can also protect your unique brand as only you are allowed to register a business with that name in the area where you file for a corporation – this means that there can’t be two businesses of the same name, so no one else will steal your idea.
3. Ability to Raise Revenue Through Stocks
As a corporation, raising capital will become much easier – we have mentioned above that people are more likely to perceive your business as more stable and established once it has been incorporated. This will increase the chance of potential investors putting money into your company to support its growth.
Furthermore, as a corporation, you can also issue shares of a stock, which will increase your blogging business’s opportunity to develop and expand. In addition to this, if you ever request a loan from a bank, you are more likely to receive it solely due to being an incorporated business.
Evidently, capital is a requirement when you want to grow and develop your business, therefore incorporating it will be greatly beneficial as it will give you more chances of raising the required revenue.
4. Income Splitting
When you have a corporation, you can use the income splitting method, which can reduce taxes paid by you personally.
Income splitting essentially entails paying your spouse a sum of money from your own personal income, as the highest paid in the relationship, for their contributions within the business.
This can happen whether you are married or not. Obviously, this means that you will be required to pay less tax as you will be perceived to earn less.
At the same time, it will maintain the financial gains in your household as both of you and your partner will be earning, and your partner will also be able to receive a pension when they are 65, due to earning this money.
5. Lend / Borrow Money From the Company
Another great benefit of having an incorporated business is that if you ever need to borrow money from your business, you can do so and pay back a minimal percentage of interest.
Evidently, this should not be your first resort to borrowing money, as it could make things more difficult for you and your business.
However, it provides you with options should you ever struggle financially in your own personal life.
6. Annual Board and Shareholder Meetings are Required
This may seem like a negative to incorporating your business, but you will be required to hold and attend shareholders meetings.
This will basically allow all shareholders to come together and make decisions on the direction of the company, which can be highly beneficial to guide your company in the best direction.
Incorporating a business can be an overwhelming process, considering there are both advantages and disadvantages, therefore it is vital you learn enough about the subject so that you make an informed decision.
If you don’t want to worry about shareholder meetings you can form an LLC and be taxed as an S-CORP.
The information above should provide you with six good reasons why you should incorporate your blogging business in some manner to protect yourself from unforeseen liabilities.