If you’re in the construction or remodeling industry, liability is a major concern for you. If one of your subcontractors hurts himself on the job, you don’t want to be sued for your personal assets. If you’re considering whether you need to incorporate right now, this post will give you reasons why you should.
1. You will be eligible for more work.
Many companies, as well as government agencies, can only hire contractors who have incorporated. So if you’ve been operating as Joe Schmoe Contracting, as a sole proprietor, you’re missing out on plenty of new work you could be getting. Incorporating will make you eligible to bid on more projects.
2. You protect your personal assets.
When you incorporate, the corporation becomes the employer of your subcontractors. In the event that you are sued, the subcontractor would sue the corporation, not you personally, which means none of your personal assets can be touched.
3. You look more professional.
Even if a company or individual doesn’t have to hire a corporation for a job, being incorporated can make you look more professional to them. It shows them that you care enough about your business to invest in the time and (modest) fee to incorporate, and that makes them feel safer in giving you their money.
4. It keeps your personal taxes separate from business.
If you don’t like mixing your household taxes with your contracting business’, becoming a corporation will help with that. After you incorporate, you’ll file your business taxes separately.
5. You can sell your business.
This might not even be something you’re considering right now, but down the road, should you decide you’re ready to retire, being a corporation means you can transfer ownership to another party and still have the name on the business. If you’re a sole proprietor and are ready to exit, the business simply dies under its name.
6. You get lower insurance premiums.
Because corporations are considered less risky to insure, you may qualify for better insurance rates for your company after you incorporate. You can put that money back into other areas of your business.
7. You can deduct business expenses.
Whether it’s the gas you burn traveling from site to site or your marketing budget, you can write off these expenses on your annual business taxes. This will reduce the amount of taxable income you have to pay on.
The construction industry is competitive enough without having the added disadvantage of being a sole proprietor. Step up your business to the next level by incorporating your business.
Convinced that your contracting business will grow once you incorporate? We’re ready to help. CorpNet can set up your corporation in as little as a day, which helps you get up and running in no time.
Photo: Laurence Wittemore on Flickr