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What's a Virtual Assistant?

A Virtual Assistant is a business owner who provides administrative support and specialized services to assist businesses and executives with their overflow. A Virtual Assistant can handle any task that is usually handled by an in house employee, but unlike an employee, a Virtual Assistant shares your goals to succeed in business -- we only succeed if our clients succeed.

How to Decide If It Is Time to Incorporate Your Small Business

Incorporating is not necessary for every business, but making that determination can be challenging. There is so much information out there and much of it is very hard to decipher. Many businesses, especially new ones, struggle with trying to decide what structure to choose not only when first starting out, but also as they begin to run and grow their business. At what point does it become necessary or advantageous to consider incorporating?

The best strategy to consider before making any decisions regarding an appropriate structure for your business is to speak with a lawyer. A lawyer can tell you whether incorporation is right for your business. Of course, I am not a lawyer myself, but through my experiences I have learned there are just a few other things you should have answers to or at least consider before consulting with your lawyer:

Is Liability an Issue for You?
As most of us realize and are aware, one of the key reasons anyone would consider incorporating would be because of the limited liability to you, the owner of the business. Since an incorporated business is a separate entity, owners are protected from most of the liabilities of the business. Many people mistakenly believe that by incorporating you are protected from all liability - this is just not true. Be sure to discuss what issues might arise in your particular business and whether you would be better protected through incorporation. Also, make sure to have your lawyer explain to you just which liability issues you will not be protected from even as an incorporated business.

Do you want your business to survive your death?
Keep in mind that incorporations continue to exist even if the owner dies. As a shareholder in your corporation, you can leave your shares in the company to someone else through your Last Will and Testament. How important is this to you and your business? Of course, for many owners who are still small and going it alone they need only consider themselves. However for others, who have employees or contractual obligations, these also need to be addressed when you discuss your plans with your lawyer.

Do you want the ability to market shares in your company?
How important is the growth of your business? Imagine being capable of raising capital for your company through the sale of shares. Only incorporated companies have this option. If this is a goal for your company, incorporation may be something you need to consider. Of course there are still options for raising capital for your business if it is not incorporated and you can also speak with your lawyer, accountant or bank manager about those options as well.

Would you benefit from the tax advantages?
Before consulting with your lawyer, make sure you also speak with your accountant. The way taxation is handled with corporations is very different from proprietorships and partnerships. At some point there will be taxation advantages to incorporating your business. Knowing what those advantages are and at what point they will “kick in” will be a key factor in determining whether or not to incorporate. The same can be said for the reverse and there are in fact, also tax advantages to having a proprietorship or a partnership. Only your accountant can best determine this based on your individual business.

How does incorporating affect a potential buyer’s opinion of you?
Not all, but some clients are more willing to do business with an incorporated business. To them having Ltd, Inc., LLC, or such, associated with your name tells them you are “swimming with the big guys”. Of course for others incorporating can have the exact opposite affect as their target market likes the illusion of the personal relationship that goes with a proprietorship or partnership. The key will be in knowing your target market and determining what their attitudes are. Unfortunately this is one area where only you hold the answers and a professional may not be able to assist you in making this determination.

Ultimately there is no right or wrong answer as to whether incorporating your business is the right choice or a necessary choice. Only you, with the help of your lawyer and accountant, can decide what is right for you and your business to ensure you are creating a thriving business.

 

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