If you are a freelancer, you may or may not have given any thought to incorporating or forming an LLC. There are actually many great reasons to do so, such as taking the next step for your business and even building your brand. Here are some reasons you may not have considered!
1. Add legitimacy to your business
Many large companies that hire freelancers look favorably upon businesses that have incorporated or formed an LLC, and some will only hire incorporated businesses. Furthermore, the ability to add that "Inc." or "LLC" to your business name or your name makes you seem more professional and "together" to your clients and shows that you are commited to your business.
2. You want to protect your property and assets
If you own substantial assets, or even just your own home and a car, you probably want to protect them from your business debts or liabilities. Both the decision to form an LLC or incorporate can help you do just that by creating a separate legal entity.
3. Get new, greater business
Many large companies will not work with individual freelancers, only incorporated businesses. To work with them, you would have to otherwise go through a contracting agency that adds 15% to your rate that you do not even receive.
4. There are tax advantages
If you form an S corporation and you are the only shareholder, only earnings paid to you (the owner) as salary are subject to employment taxes, while any money left that is distributed as a dividend or reinvested in the business is not subject to self-employment tax. This can save you thousands over being a sole proprietor if you run a very profitable business.
5. Raise capital later
If you want to expand your business, you fill find it a lot easier to raise capital if you form an LLC or incorporate, and you will not have to rely on personal loans that you are personally responsible for to grow your business.
6. You can expand, hire and create an agency
Do you have dreams of one day expanding your business beyond yourself, maybe hiring employees and creating a professional agency? If so, you probably don't want your company name to be your name, and you don't want the tax nightmare and serious liability issues that goes along with starting an agency as a sole proprietor.
7. Track brand awareness
As your business grows, you may want to track how your brand has saturated the market. Unless you have a very unique name, this will be impossible without setting up a unique name for your business.
Learn more about starting a business from USA Corporate Services, Inc.
1. Add legitimacy to your business
Many large companies that hire freelancers look favorably upon businesses that have incorporated or formed an LLC, and some will only hire incorporated businesses. Furthermore, the ability to add that "Inc." or "LLC" to your business name or your name makes you seem more professional and "together" to your clients and shows that you are commited to your business.
2. You want to protect your property and assets
If you own substantial assets, or even just your own home and a car, you probably want to protect them from your business debts or liabilities. Both the decision to form an LLC or incorporate can help you do just that by creating a separate legal entity.
3. Get new, greater business
Many large companies will not work with individual freelancers, only incorporated businesses. To work with them, you would have to otherwise go through a contracting agency that adds 15% to your rate that you do not even receive.
4. There are tax advantages
If you form an S corporation and you are the only shareholder, only earnings paid to you (the owner) as salary are subject to employment taxes, while any money left that is distributed as a dividend or reinvested in the business is not subject to self-employment tax. This can save you thousands over being a sole proprietor if you run a very profitable business.
5. Raise capital later
If you want to expand your business, you fill find it a lot easier to raise capital if you form an LLC or incorporate, and you will not have to rely on personal loans that you are personally responsible for to grow your business.
6. You can expand, hire and create an agency
Do you have dreams of one day expanding your business beyond yourself, maybe hiring employees and creating a professional agency? If so, you probably don't want your company name to be your name, and you don't want the tax nightmare and serious liability issues that goes along with starting an agency as a sole proprietor.
7. Track brand awareness
As your business grows, you may want to track how your brand has saturated the market. Unless you have a very unique name, this will be impossible without setting up a unique name for your business.
Learn more about starting a business from USA Corporate Services, Inc.