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Entrepreneurs in South Carolina: Three benefits to incorporation

Having a great idea for a business and actually getting that business up and running are two very different things. One requires creativity and a feeling for what the market in your area needs. The other requires business acumen, time and patience.

It may be tempting to put off putting in the time and patience, let alone tuning into that needed business acumen, to actually incorporate your business with the right business structure, but the benefits associated with the incorporation are often worth the effort.

Wait, what is a business structure? A number of different business structures are available. These are defined as, essentially, legal entities that can help separate and protect your business and personal interests.

Some of the more common examples include the sole proprietorship, partnership and corporation.

What are the benefits of incorporating my business? There are a number of benefits, but three of the more common include:

  • Protection from liability. Having your business incorporated creates a type of shield between your business finances and your personal finances. When done correctly, any lawsuit that is filed against your business should threaten only your business. Without incorporation, such a suit could threaten your personal finances, putting your savings, home and other assets at risk.
  • Access to credit. One of the steps towards incorporation is to register your business with the state. South Carolina's government website is helpful and has a number of aids and articles that can provide some guidance. Taking this step lends credibility to your business, serving to set it apart within your local business community. This can help when attempting to receive funding for your business endeavors.
  • Tax benefits. There are some tax benefits to incorporation. For example, businesses can generally take tax deductions for business expenses and qualified medical expenses.

It is important to note that there are some cons to incorporation as well. Tax issues can get complex and vary depending on the type of legal structure chosen for incorporation. Entrepreneurs must also be willing to put some time in to complete paperwork required to fulfill your obligations as the chosen structure.

Which types of business structure is right for me? Determining the right entity can be difficult. As such, it is wise for entrepreneurs to seek the legal counsel of an experienced attorney. This legal professional will review information about your business goals and discuss how various entity options could impact growth potential and liability as well as tax implications.

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