Incorporation Basics
So, you make some money. Should you incorporate?
What incorporation means?
Incorporation means creating a new entity recognized by the state.
You are going to do your work through this entity. If you want, you can do all the professional activities though it. You can also start a separate company for each project.
You’ll do your professional stuff through the company.
When to incorporate?
It is not always necessary to have a company. Freelancers are doing just well by working as independent contractors.
You may consider incorporating when:
- Your business takes off. You’ll need to enter into contracts and many business partners will want to deal with a company, not an individual. Also, it is good for you to separate your personal finance from your business finances.
- You need financial services that are not available to individuals. Some countries do not allow e-commerce activities by individuals. Paypal and Stripe are not supported everywhere. Incorporating in a better business environment would boost your business.
- You need asset protection. Your business will earn assets and you want to protect it. When creditors come after your assets, the business assets will remain out of their reach.