Small Business Myths – 3 Common Misconceptions

One of the best things you can do as part of your business strategy is to incorporate it as a formal entity. But many (in fact, most) business activities are conducted informally with no business structure at all. And it’s because many small business owners are operating on mis-information. Business is hard enough when you have all the correct information. But when you’re dealing with inaccuracies and misconceptions it becomes even harder. Here are three common misconceptions and the correct information about them.

1. I’m too small to incorporate. False. No matter what your size, it always makes sense to incorporate your business as some type of business entity. The benefits include liability protection, tax reduction, formal recognition and improved banking/financial opportunities. Even if your business isn’t yet making money, getting the business itself formalized is an important first step that can provide far greater benefits than most people realize.
2. I need a separate business entity for each business activity I’m involved with. False. A business can be incorporated with the purpose of conducting any (and all) legal trades or business activities. That means you can include multiple business activities under the same business entity. And it often makes sense to do so. In many cases, the benefits of incorporating can be gain with just one entity and you don’t need to have multiple entities at all.
3. Incorporating a business increases the record-keeping requirements. False. The laws defining record keeping requirements for a business are the same whether or not it’s incorporated. And in many cases, the expectations can be even greater for an unincorporated business because the IRS is wary of individuals mixing business and personal activities together and expects more detail to demonstrate this isn’t occurring.

If you’re doing business in any way (including looking at options with the anticipation of something in the future) then you should incorporate and do it now. It’s fairly straightforward and not nearly as expensive as you might think. And based on my experience, the benefits are substantial. Call Nielsen Law Group today to schedule your free business formation consultation by calling (480) 888-7111 or by submitting a web request here.