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Legal Aspects

There are some legal aspects to consider when running a business on the Internet. Is it ok to open up only LLC company for multiple websites and is payment online safe? These are just two things to think about as an affiliate but there’s much more you should reflect on. Learn about the legal aspects of being an affiliate!

Legal Benefits and Disadvantages of Incorporation

Tuesday, Jan 27, 2009

As your affiliate business grows, you may come to a point when the word "incorporation" makes its way into conversations with peers or clients. Since you've been operating your own business as a sole-proprietorship or partnership for a number of years, the thought of incorporating your business may have never entered your mind.

Speaking to a certified accountant can provide you with more information about how incorporation can help you save on your taxes.

However, there are a number of reasons you may want to look into it. In fact, choosing to incorporate can offer numerous benefits, even on a personal level.

What Is Incorporation?

When a sole-proprietorship or partnership business grows, it becomes a much larger entity, both fundamentally and in the marketplace. Essentially, by incorporating your business, you're taking it to the next level of development. Whereas a sole-proprietorship has a direct effect on your personal liability, a corporation is an individual entity, entirely separate from the owner.

The Benefits of Incorporation

We live in a very litigious society. It's common for business owners to find themselves in court for one reason or another, even if the reason is minute. When someone tries to sue a sole proprietorship, the owner of the business is often legally responsible for awarded damages.

Lawsuits can ruin a business and the owner may suddenly find himself in excessive debt. With a corporation, the business is its own entity and the owner is not personally responsible. In other words, personal property will not be in jeopardy.

In addition, if your company is a small to mid-sized corporation, then you may be eligible for certain tax-breaks might otherwise not apply. Speaking to a certified accountant can provide you with more information about how incorporation can help you save on your taxes.

If you make your corporation public, you can raise money and sell shares to fund your company's endeavors. In this way, investors will purchase shares in your company, making it easier to raise the funds you need. As your company continues to grow and succeed, the shares owned by your investors will increase in value.

Other benefits of incorporation include the eligibility to pay less for necessary items like health insurance and office supplies. When it comes time to sell the business, corporations can demand much more money than a non-incorporated business. Why?

With a corporation, it's easier to gauge the value of the company. With shareholders on board, you can show earnings and future investment opportunities that will be more enticing to potential buyers.

The Disadvantages of Incorporating Your Business

Certainly, incorporation offers a wealth of benefits that can greatly improve your company's growth. However, it's not without its own share of disadvantages.

For instance, if you take your company public and bring shareholders into the mix, you will have to utilize a board of directors. This will cause you to lose some power over your company. In truly terrible situations, the board of directors can actually vote out the very person who started the business!

If you love the idea of having 100 percent control over the daily needs of your company, then you should not consider incorporating your business. On the other hand, if you wish for your business to grow into a much larger entity, one with a public profile and high future expectations, then incorporation is definitely something you may want to consider.


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