One Good Reason for the Owner/Manager of a Business to Incorporate

June 11, 2014

Business owners rarely give enough thought on how to properly structure their business. We are particularly taken by how they fail to make use of their corporate structure, especially if there is the ability to do business by way of incorporation.

If you are doing business as a sole proprietorship, you will be personally taxed on the income, which currently ranges from 39% to over 50% depending on where you live. In short, this means the amount available for reinvestment in the business will be less than half what was originally earned.

Instead, if you are incorporated, the corporation pays tax at less than 20% on the first $500,000 of active business income. If the accumulated income is reinvested in the business, each dollar the business earns will generate 80 cent after tax dollars for use in the business leaving much more useable capital at the end of the day.

If you would like to discuss incorporation or any other matter with any of our professionals feel free to contact one of our offices at your convenience.