If your general contractor business is already up and running but you’re still acting a sole proprietor, then you could be costing yourself money and putting yourself at risk.
What you’ve got to understand is that a registered corporation is a separate legal entity from you. This has many advantages, from shielding risk to reducing personal tax liability.
If you’re taking your business seriously (and you should be), then you really need to register as a corporation.
Here’s our 3 big reasons why you need to do this, and soon.
1, Protect Your Personal Assets
As I mentioned above, a registered corporation is a totally separate legal entity. This also means that business assets and personal assets are separated – your home belongs to you personally, whereas your work truck belongs to your company.
So why does this matter? Well let’s imagine that you have a line of credit with a supplier and you owe them a substantial amount, and then some sort of business crisis happens. Something happens which means you can’t pay what you owe. If you don’t have a registered corporation in this situation, it means that your personal assets are at risk to pay back the debt.
This means that through court proceedings, your family home could be taken from you in order to pay debts whether they’re loans, lines of credit, or whatever else.
Even with a registered corporation a situation like this is a total nightmare for your business. You could lose your business.
But without a corporation, you could lose all of your personal assets. Your car, your family home, everything.
2, Limit Your Risk
This point is a bit similar to the one above, but it relates to legal actions against your business and how they could impact you personally.
OK, so let’s imagine another nightmare situation to illustrate how having a corporation is better for your contractor business: A member of the public gets seriously injured or killed on or near one of your job sites.
This is my worst nightmare, and maybe it’s yours too. You can follow all the safety regulations and take all the necessary precautions, and things like this can still happen out of your control. This is an extreme example, but there’s tons of other legal matters that your business could get caught up in… it’s just a risk of doing business. A risk that you need to shield yourself against.
In the above example, there will almost certainly be some sort of legal proceedings that includes your business. And if you don’t have a corporation – that means these legal proceedings involve you directly, rather than your corporation (which, again, is a separate legal entity).
This opens you up to all sorts of risk. Maybe you are personally responsible to pay damages, or are personally responsible for breaking the law, or whatever else. The repercussions of this for you and your family could be catastrophic.
Losing personal assets to pay damages or legal fees, criminal or civil charges, and all sorts of nasty stuff that could be easily soaked up by a corporation – if you register one for your business.
3, Pay Less Tax
If the first two points didn’t convince you (they should), then maybe paying less tax and getting more cash in your pocket will appeal to you.
The benefits of this one sort of speak for themselves, right? Less tax, more money: good, good, good.
If you’re a sole proprietor it means that all of your profit is taxed directly to your as an individual. This that if your business is doing well, you can end up paying an insane amount of tax.
And here’s where your corporation as a separate legal entity comes into action once again: In many states, the tax rate for a corporation is lower, which means that right away you could pay less tax on your profits.
However, these profits are still an asset of your business, not a personal asset for you.
But you can choose to take a small salary (to keep your personal tax liability low), and take the rest of your income as dividends. You’ll often end up paying much less tax on dividends, compared to taking your income as a salary. Of course, this is only an option if you have a corporation.
So there you have it, 3 big reasons that you should register a corporation for your business. It seems like an easy choice to me, honestly.
Registering A Corporation Is Much Easier Than You Think
You have a business to run. You don’t have time to be messing around with getting a corporation set up.
I get that, I really do.
And that is exactly why MyCorporation.com was created – this wonderful company makes registering as a corporation insanely quick and easy.
Give them some information about yourself and your business, and they do the rest. It’s really as easy as that.
MyCorporation.com helps American businesses just like yours to reduce liability and save money every single day.
If you are serious about success as a general contractor, then you NEED a corporation – and working with MyCorporation.com is the easiest and cheapest way to make that happen.
Their services start at a mere $69. You won’t find that deal elsewhere – you can get started in 3 easy steps:
- Click here to go to MyCorporation.com.
- Select the type of entity you’d like to register, and your state, and click “get started”.
- Let MyCorporation.com take care of all the leg work.
They also offer free consultation if you’re not sure what type of corporation is best for you!
So there it is, all the information you need to help you decide whether or not to register a corporation. But really, you’d be mad not to, right?