Business development comprises a number of tasks and processes generally aiming at developing and implementing growth opportunities between multiple organizations. It is a subset of the fields of business, commerce, and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships.
There are a number of benefits afforded by forming your business as a corporation. Chief among these benefits is the protection from personal liability and asset seizure that is offered to the owners/shareholders of a corporation. These protections limit the legal and business liabilities (protection from lawsuits and debts) encountered by the corporation because it is treated as a separate, legal entity. There are also favorable taxation, deductible employee benefits, personal asset protection, anonymity, ease of raising capital, and credibility benefits that are the hallmark of an incorporated business.
Other beneficial features of a corporation are it’s broad range of powers and flexibility beyond that of a sole proprietorship — a corporation can have it’s own bank accounts, own property, conduct business, and even establish a line of credit irrespective of the individual accounts or credit of the shareholders. It can sue and be sued, hire staff, and engage in business dealings, all the while maintaining itself as an entity separate from its shareholders.
How Corporations can Reduce Personal Liability
As a corporation is created, a separate, legal entity is formed that is recognized as being separate from its owners (known as “shareholders”). Because of this separate entity status, when a corporation is sued, it is sued as an entity different from its shareholders and hence any award or decision against a corporation will not go against the shareholders as individuals — these provisions and the manner by which a corporation is treated by the law serve to protect the shareholders and managers from personal liability. These types of protections are, of course, not part of a business operated as a sole proprietorship — if a sole proprietorship is sued, the owner is personally liable for any judgments or decisions against his company, and can hence lose personal assets and property. But these protections are not automatic to a corporation; there are certain steps and procedures, or “Corporate Formalities”, that must be observed in order to help ensure that these protections are in place.
Corporations and Tax Advantages
There are certain tax advantages that are available to corporations that simply are not available to sole proprietorships or simple partnerships. These include the ability to write off medical benefits provided to employees, to write off business and entertainment expenses, tax-favorable pension plans, and more. Also, depending on the type of corporation formed, there can even be “pass through” taxation benefits than can further enhance the viability of the corporation and avoid double-taxation (when profit is taxed at the corporate level as profit, then again at the individual shareholder level as earned income). Better tax treatment means that your corporation is more likely to attract suitable investors and allow more of the
net profit to remain in your coffers.
Another tax advantage not to be taken likely is the protection from audits. It is well documented that sole proprietorships, or individuals filing self-employed Schedule “C” tax returns, are more likely to be audited by the IRS. Conversely, the audit rate for corporations is much lower than the self-employed. Shareholders own, and can be employed by, the corporation, thereby eliminating the need to file Schedule C tax returns.
Deductible Employee Benefits of a Corporation
Another great benefit you can enjoy when you form a Corporation is the wide array of tax deductions and tax-deductible benefits one can provide to oneself and to the other employees of the corporation. Even a one-person Corporation can enjoy tremendous tax-deductible benefits such as health insurance deductions, travel deductions, automobile deductions, client entertainment deductions, recreational facilities, etc. One of the most beneficial deductions is the pension plan or 401K.
Money placed in a properly structured pension plan is tax deductible and the funds grow tax-free for retirement. These benefits alone can justify the existence of the corporation, many times over.
Form a Corporation for Asset Protection
When a civil lawsuit is filed, it generally comes from one of two directions: Business or personal. If your company is incorporated and is sued by another company for business reasons, and loses said lawsuit, the shareholders will not be required to satisfy the debts of the corporation from their own personal assets. This safeguards the assets and property of the individual shareholders, and as such, is more attractive to potential investors. This is the “limited liability” feature of a corporation. If faced with a personal lawsuit, such as a divorce or an automobile accident, for example, the assets held by the corporation are safeguarded from any ensuing lawsuit or settlements against the individual shareholder — another reason why a properly formed corporation is attractive to potential investors.
Aged Shelf Corporations
Cirqa Financial has an inventory of Aged Companies, also known as Shelf Corporations ready to be acquired. An Aged Corporation, also known as a Shelf Company or Shelf Corporation, is a company or corporation that has had no activity – metaphorically, it was put on the ‘shelf’ to ‘age’. An aged corporation is a ready-made corporation, which has no liabilities and can be used for commerce at any time.
Top Benefits to an Aged Corporation?
Business History – You get a company with a clean history. An Aged Corporation is free from debts, liabilities, taxes and obligations.
Creditworthiness – Most lenders do not consider credit applications from businesses that are less than 2-4 years old. Credibility – A company with a history will have more credibility with lenders, suppliers and business partners. Time Saver – When you buy aged corporations, you skip the time and effort involved in registering a new business entity. Corporate Image – Clients trust a company that has been in business for a number of years. Contracts – Clients, investors, lenders, suppliers and the government will often require your business to be a certain age before they will consider doing business with, investing in or lending to your company.