I own a business, should I incorporate?

People are moving online faster than ever. Technology is helping brick-and-mortar businesses to adapt in a fast changing world. Once a website is created and visitors start browsing your business can expand greatly, however there are also a number of legal risks that it is exposed to.

While the process of incorporation has additional costs to merely starting or continuing a business, there are a number of benefits that come from registering a company (aka incorporation). The most important thing to remember is that an incorporated company is a separate legal entity from the company owner — this is crucially important should things go wrong.

Debts and liabilities.

Company owners have legal protection when their business becomes incorporated. This includes protection from personal liability, company debts as well as obligations. In the worst case scenario, if you are the owner of a business that falls into bankruptcy or debt, creditors have the capacity to repossess your personal and private assets. Where you are the owner of a limited liability company on the other hand, the debt remains the responsibility of the company.

Company life

Another advantage is essentially, infinite life and continuance of the company. A company does not have the limitation of being tied to its owners and has an indeterminate life span regardless of whether the owners pass away or exit the enterprise. Additionally it is easier to sell company shares and interests as well as raise capital, while the sale of a corporation is much simpler than the sale of a business, with a different structure, in most other cases.

Other owners and founders

Where a business is run with more than multiple owners or founders, the potential for disputes and messy division of assets hangs overhead. In an incorporated setting, the possession of shares in the company gives a clear indication of the owners’ investment in the enterprise, rather than any pre-incorporation promises such as verbal or written statements.

Third parties

As a separate legal entity, an incorporated business has different liability obligations to third parties and employees. Where a business engages with a third party, be employees or other businesses, incorporation means that when the agreement is entered into, the third party enters into a legal relationship with the company rather than the owner personally.


It is a fact that corporations are taxed at much lower rates than individuals. Business owners in structures such as sole proprietorship or partnerships require the owners to pay taxes founded on their personal income statements regardless if 100% of the profits are being reinvested into the company. Incorporating a business allows the company to be taxed as a corporation separately instead, which can save the business owners a significant amount of money.

Competitive advantage

In a highly competitive world, undergoing incorporation can provide your business greater credibility and recognition. To be known as a registered company improves your legitimacy on paper too. Interested investors, consumers, suppliers and even partners often have a preference to enter into agreements with incorporated companies than other businesses. Incorporation provides you that little extra competitive advantage.

So, what’s the process to incorporate? Generally, law firms charge a significant fortune to bring you through the company registration process, there are a number of cloud-based legal services which can minimise these costs and often work quicker than law firms. An online solution such as LawPath’s can provide immediate registration through the application.