The Blog Of TL Wall Accounting

Tweet about this on TwitterShare on LinkedIn

Should You Start A Health Savings Account?

Since the Affordable Care Act’s long term life is up in the air, it’s time to start looking at other health care options to help you with medical bills in case you need medical help. This might leave the option of a health savings account as one of your only options, at least for a short time period.

A health savings account (HSA) is a medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan. The benefits of having one is that it’s tax free and you can rollover anything you’ve accumulated from past years. The downsides are it’s only available if you’re in a high deductible health plan and unavailable if you have Medicare, Medicaid or Tricare coverage.

If you have one of these high deductible insurance plans now, it’s not a bad idea to have a HSA. Even if the ACA goes away, it won’t be immediate, which means any money you’ve saved will still be tax free if you need it. The most you can put into it is $3,400 for individuals and $6,750 for families; if you’re over 55 you can add an extra $1,000.

If you’re employed, you can have your contribution automatically deducted from your paycheck, which is the easiest way to go. Otherwise, you can add money to it whenever you want. Also, you can decide to invest your contributions, which could help you build your health funds (it could also go the other way; something to think about).

You’ll get what looks like a debit card and be informed of your balance monthly, and that’s what you’d use to make your payments. It’s pretty simple, and easy to track.

On the other hand… if you’re going to go through all that trouble, it might be just as easy to create a savings account and start funneling more money into it just for this use. True, it’s not tax free, but you’ll have total control of it and not have to worry about whether or not the ACA health plans are going away. Right now one of the houses of Congress is advocating a HSA health system, so it’s possible that starting one might be a safe bet, but it might not be the same type of plan it is now.

In the meantime, you still need to make sure you have health care coverage for the time being. The penalties for going 3 months in a row without coverage could be as high as $2,085 for the year, or 2.5% of your income… whichever is higher. Protect yourself; your health is worth it.
 

Tax Filing Changes For 2017

Time for our annual tax update for all of our clients. Those of you who aren’t our clients yet can read this and decide to become a client of ours; we won’t mind! 🙂

IRS 1040 Tax Form Being Filled Out
Creative Commons License Ken Teegardin via Compfight

As a reminder, New York State’s Corporate Minimum Fixed Dollar amount is based on Gross Receipts. Extensions should be filed by the beginning of March if possible to allow time for processing. For those of you who file extensions and may owe tax, it is important to note that the tax is due April 15 for personal returns, even if you do not file until October.

New for 2016: Affordable Healthcare Act.

Most of you are aware of the government mandated health insurance. There are many facets to this law, but for 2016, the penalty has increased to a minimum of $695, for those who are not covered by a health insurance plan. If you are married with dependent children it can be upwards of more than $1000, depending on how long you have been without coverage, etc. The penalty is calculated on and reflected on your tax return.

Here are a few of the of the credits/deductions that have been made permanent:

* Educator Credit $250
* Sales tax deduction on Schedule A Itemized instead of state and local income tax
* 179 Depreciation Deduction – Limit is set at $500,000 with a cap of 2 million
* Charitable distribution from and IRA (tax free) for individuals over 70 ½ years old
* Mortgage Insurance Premium – Deduction on Schedule A

For those of you who have children in college, the American Opportunity Credit is still available up to $2,500, which can be used for all four years of post-secondary education. Of the $2,500 40% may be refundable, up to $1000. The lifetime learning credit is based on the first 20% of the first $10,000 of qualified expenses.

The Student Loan interest deduction is still limited to $2,500 per year.

The maximum Earned Income Credit for 3 children is $6,269 and $5,572 for 2 children.

The standard business mileage rate for 2016 is 54 cents per mile, medical and moving are 19 cents per mile and charity is 14 cents per mile.

Please note the IRS is delaying all refunds that include EIC until February 15, 2017. Please see page 2 for more information.

As with any tax law change, there are always exceptions to the rules. If you have any questions, regarding any of the new tax law changes, please call us at the office and we would be more than happy to answer them.

The IRS has put more responsibility on the tax preparers regarding due diligence. We have more paperwork to process while doing a tax return, in addition to asking more questions of our clients that may be redundant.

For those of you that qualify for Earned Income Credit, Child Tax Credit or the American Opportunity Credit (College tuition Credit), please make sure you have the following information readily available when you have your taxes prepared:

• 1098T College Tuition statement (cannot get credit without form)
• Child’s report card, medical records, child care provider record, or other documentation

Additional questions will be asked when your tax return is being prepared in-order to comply with the new rules implemented by the IRS. Thank you in advance for understanding the mandates that are put on us as we prepare your tax returns.

Every client of ours receives a copy of their return when it is prepared, and we’re adding a new feature this year. Each client will receive a CD with a PDF file of their tax return. We are hoping with this new addition you’ll be able to download the information to your computer and have your tax return readily available as needed. If an additional copy is needed throughout the year, the fee will be $15.

As always, we hope you’ve had a safe and healthy holiday season. We look forward to seeing you during tax season.
 

Educational Debt Can Be Overwhelming

These days one has to ask themselves if the cost of getting a quality college education is worth it. A degree from a major university can end up costing more than 2 good homes, especially if the student decides to go for an advanced degree. One has to ask if it’s worth it and, if so, how they’ll be able to pay for it.

Joint Graduation Day
Sarah R via Compfight

Unfortunately, college debt is one of two debts that you can’t erase if you declare bankruptcy; the other is tax debt. College debt, though it can’t get anyone throw in jail or fined, will most often be higher and harder to deal with. This is because lenders don’t always work with families on how much needs to be paid monthly, though most will work with you as to when you have to start paying on it.

At some point one has to figure out what’s worth it and what’s not worth it when going to college. For instance, is a bachelor’s degree from Harvard really worth more than one from a 4-year state school?

In general no; if the student went to college for theater who’s going to care? If it’s for an accounting degree, probably not. Political science, with an intention on being a politician someday, sure. A law degree; absolutely.

Then there are the advanced degrees one has to think about. Is a master’s degree from Yale really all that much different than a master’s degree from UCLA? Aren’t both big name schools? And won’t the degree from UCLA not only cost thousands less, especially if you live in California, but you’ll also be in better weather?

In any case, if you or a family member is still looking to go to a big name college, you need to have a plan for attacking the debt once college is over and the student is ready to go into the workplace. You also need to figure out way in advance the potential income ratio matched against how much it costs to go to school.

In today’s economy, if the student is getting a master’s in education and want’s to be an elementary school teacher, it’s going to be hard come close to earning enough to pay off a college loan. If the student is going for a doctorate and hoping to land at a major university, there’s a possibility, but nothing’s guaranteed.

The same goes for the medical field. Specialists such as a heart surgeon will easily be able to pay back the loan in good time. If the hope is to be a general practitioner, it might take working 12 to 14 hours a day to have any chance of keeping up on the payments; so much for luxury living.

Parents and students need to be realistic in protecting the student from crushing debt after graduation. There are many good colleges that one can get a very credible 4-year degree from. Many of those same schools offer competitive pricing for masters degrees as well. It’s something to think about for the future.
 

What Is Your Self Employment Worth?

This looks like a strange question being asked, especially if you’ve been thinking about going into business for yourself or you’ve been in business for a while, but it’s got a big meaning. Moreso for those new to business than those who’ve been in business for a long time, it seems most people have a problem in figuring out not only how much they should charge for services but how much their worth… aka, what their value is worth.

Premier Wynne announced the successful completion of Project Advantage; a program that enabled a group of four medium-sized, family-owned bakeries to collaborate to increase production and create new jobs.
Premier of Ontario Photography via Compfight

Even though every business is different, there needs to be a starting point one should look at when they first get into self employment, and then try to grow from there. We’re going to offer a few things to consider.

The first thing to consider is how much you’re making working for someone else. If you’re making at least 25,000 a year, your initial goal should be trying to earn at least 50% more than you’re making now, with your goal within a couple of years to be making at least 100% more.

Why? You have to consider what you’re losing by working for your present company. The cost of health insurance, even if you’re paying some amount for coverage at work, is going to go up drastically, at least 50% over what you’re presently paying. You’re also expected to pay it in a larger lump sum monthly as opposed to paying a little bit every week or two weeks. True, you’ll have options for coverage, and in most states there are multiple choices based on your state’s ACA (affordable care act) exchange, but it’s something to consider.

While we’re on insurance, if you had dental, vision, or any other type of insurance that’s now coming out of your pocket as well. These aren’t overly expensive to buy on your own unless you have a physician you already like, which can be problematic in some states or smaller communities; then you’ll likely have to pay more to keep that person.

The second thing to consider are office supplies and other equipment. You don’t have an employer to rely on for these items, and even though you get to write them off on your taxes, the amount up front doesn’t benefit you.

The third thing to consider is time off. Right now you probably get vacation and sick pay; that’s not happening when you work for yourself. This means you’re going to have to be disciplined enough to put some money aside for those rainy days unless you can work from home, possibly in bed via a laptop or tablet… although you might not feel like it.

All other bills aren’t mentioned because if you started off making the same amount of money you were making while working for someone else you’d probably already figured out how to pay those bills while still being able to eat and put gas in your vehicle.

Now, notice we started talking about making more than 25K. If you’re making less than that, or not even close to that amount, you’re going to want to think about making at least 75% to 100% more up front to cover those same items as above. The difference maker is that you’ll probably qualify for a bigger subsidy from the ACA, thus you won’t have to worry about paying for health care, and you might even get a reduction on dental coverage; vision care is still on you.

These aren’t set in stone, but it’s a pretty good guide to start with. What you have to do if you consider working for yourself is change your mindset from employee mode to professional mode. Professionals have the right to make more money because they have more expenses. As long as you have a place to start, you can determine what you want to make from there for your products or services.
 

Writing Off Home Office Expenses

Most small business owners working out of their home knows they can write off expenses for their home office. Still, not all that many of them do, and they might not know how it all works. We’re going to offer a few bits of information that might help you save money on your taxes.

The first thing you should know if that you have write offs based on the dimensions of your office. If your office is 10×10 as an example, you get to write of $5 per square foot, which in this case comes to $500. There’s a maximum level of 300 square feet, or $1,500. This is called the “simplified method”. A more technical method involved figuring out the percentage of your house you’re using for work, such as if you’re running a day care out of your home or you have a studio where you work on projects that you want to claim. If you have extra complications like that it’s easier to work with an accountant to help you figure it out properly.

The qualifications for doing this is that you do a substantial amount of work from your home office, but it’s rare that anyone will check to see how much work you’re doing from your home. It’s supposed to only be used for business, but the definitions would be hard to prove either way. For instance, if you allow your children to use your office to do their homework it’s technically not allowed. If you use the room for other purposes, such as a laundry room (although no one would do this; just an example) then technically you’re not allowed to claim the deduction unless you have some kind of defined border showing which part is office and which part is home use.

By the way, if you’re an employee who works from home, you get to use this deduction as well. The same space rules apple as above. Strangely enough, you also get to write off expenses as it applies to your mortgage or if you rent an apartment.

Did you know if you decided to paint your office or change the flooring exclusively in there, you get to write off some of the expenses for this (you get to write off painting in full). Also, if you have a dedicated phone line for your business that counts as a write off.

If you have to store any type of inventory in your home and that room is used exclusively for that purpose you get to write that off. However, you can also write off some expenses if you use a portion of a room like a basement, as long as your home is the only location of your business.

There are a lot more exemptions you might qualify for, but truthfully it’s probably best to talk to a tax professional or your accountant to help you calculate these things and keep yourself from going crazy trying to figure it all out.

Spending Money To Make Money; How Much Should You Spend On Marketing And Education?

We often hear from some of our clients who are willing to spend inordinate amounts of money to try to make their businesses run better. We also hear from clients who are risk averse. Although there’s not really a wrong way or right way of doing things, we thought we could offer some advice on how to determine whether you should or shouldn’t spend the money, and why or why not.

Let’s talk about education. Training is something every business should spend money on. All sorts of training; sales, marketing, budgeting, education on what your business is geared towards… no matter what it is, education should always be a part of your business expenses.

It’s hard to determine how much education is enough, or how much you should spend. Instead, it’s probably easier to determine how much education you should spend money on based on location and how often it takes place.

For instance, if you can afford $200 a month for local training on something critical to a certain portion of your business, it makes a lot more sense than if you have to spend that same amount of money traveling halfway across the country multiple times, which costs you travel expenses and time away from your business.

Going to a business seminar out of town that offers something different than what you can get locally, while giving you the chance to network with others in your industry is a great benefit across the board, but it’s something you should plan on doing maybe only a couple of times a year unless you’re a vendor at that same conference, where you might be able to generate leads or business by attending.

Unless you’re a new business, we wouldn’t recommend spending more than 10 – 20% of your budgeted expenses, because you need to make sure you’re going to get a legitimate return on your investment. If you’re new, there might be aspects of training you need that might cost you more than this, but always make sure you’re not hurting your immediate ability to earn a living.

Let’s talk about assistance. We talked about hiring people who can do some of the work for you so you can concentrate on the work you need to do for your business. Although this is a wise thing to do, there needs to be some considerations on what you’re looking to do before you spend the money.

One of the biggest scams you might deal with comes with a lot of social media marketing and lead generation. Whereas there are some legitimate businesses that do this work, there are a lot of others who not only won’t get you the leads you want but could seriously jeopardize your website’s standing on search engines.

The same goes for certain types of pay per click ads. Many people will advertise on media sites and be informed about the number of impressions those ads get. Truth be told, all an impression means is that it came up on a page when someone went there; it doesn’t mean anyone clicked on your ads at all. If your ad is on the wrong type of website, you’ll spend a lot of money with little return. Yet, this is a common recommendation by some companies who want to help you set up your web presence.

The best way to evaluate marketing and any other service is by asking a lot of questions, determining what those other people can do for you that you either can’t do for yourself or don’t want to always do on your own, determine how much you believe you can afford and stick to that budgeted plan. Even if others are going to be doing some of the work for you, it’s imperative that you set up a schedule for when they should be reporting to you on what they’ve done for you, and always stay involved to make sure you’re getting your money’s worth. One last thing; don’t always go for the cheapest option!

Paying Estimated Tax When Your Income Is Low

Many small businesses ponder the question of whether they should, or are supposed to, pay estimated tax quarterly when their income is low. It’s an interesting question, so let’s take a look at it.

When you look at the tax code, there’s a line that states: “Those who have income from their own business will need to make estimated tax payments if their tax liability is expected to be more than $1,000 for the year.”

This highlighted part begins the whole show, along with this one: “If you owed taxes at the end of last year, it probably means that too little was withheld from your paychecks, or you had other income that increased your tax liability”.

Let’s take the first one. The reason tax liability is highlighted is because it indicates what you might have to pay, not how much you’ve earned. This is an interesting distinction because, although you have to file taxes if you make more than $400 in a calendar year, the odds are that if you didn’t make a lot of money for the year that your tax liability won’t come close to owing $1,000.

Many small businesses have seasons where they might make a lot more money as opposed to making it all year round. If that’s the case, then making estimated payments when that time period comes up can make a lot of sense. However, paying every single quarter might not be feasible for you if you have to stretch your money out, so it can be a tough decision.

The best thing in this case is to at least pay something, even if it’s only $50, because you not only have to deal with the federal government but in some states they’re going to want a piece of you as well.

A caveat to this is if your spouse is earning a full time income and has taxes being taken out by their employer. In this case, if you’re filing jointly, you can probably get away with not paying anything because the bulk of the tax liability will be coming from them. It doesn’t hurt to hedge your bet though; you could end up getting your entire payment back.

Now let’s look at the second one. This one is a bit different because when you owe money and they don’t see estimated payments, and you don’t have a spouses income to offset your own, the IRS starts expecting you to pay quarterly, especially if you go on a payment plan.

If you can pay your balance within 3 months or so they’ll usually leave you alone; the IRS isn’t as scary as they’ve been made out to be. If you can’t, then you might have to deal with them at some time. Just remember that you can make small quarterly payments; at long as they get something they’ll leave you alone.

Our advice would be to try to make some kind of quarterly tax payments just to be safe. Obviously if you make a lot of money it’s the smart thing to do. If you don’t, and you can’t, don’t immediately worry about it because you’ll always have both time and payment options to catch up when you can.
 

Figuring Out When To Pay Someone Else For Work You Can Do

A common event with many business owners is when something either goes wrong or needs fixing and, instead of hiring out, they decide to take care of it themselves. Even if they can take care of the issue, one has to ask themselves if it’s always the wisest choice at the time.

~Cookiecat at Computer~
~Sage~ via Compfight

If income is a problem then there’s no question that if something needs to be taken care of and you can do the work that you should do it. However, even here, sometimes it might pay off to have someone else do at least a portion of it.

For instance, let’s say that part of your marketing campaign is to send out 50 letters a week for a month. You have a standard letter already set up and all you have to do is fill out the envelopes. The thing is, even if you’ve already printed out the letters, folding, sealing and putting stamps on those letters could take you 3 hours to do. If your hourly billable rate is $100 an hour, you just lost the opportunity to make $300.

In this case someone like a virtual assistant might have been the way to go. Many VA’s cost less than $20 an hour, and whether you supply them with the paper, envelopes and stamps beforehand, those are things you’d have had to purchase yourself. This means that not only would your costs have only been $60, which you could have written off, but you might have been earning money during that same time which means you’d have made $240 off the deal.

Let’s look at something much bigger. One of my clients recently realized that a few of his websites were losing traffic because he hadn’t upgraded them to the new Google standards of mobile speed capability. The cost for hiring this work out would have cost at least $2,000, which is a hefty sum.

Since he had the technical capability to do it himself, he decided to take that task on. The thing is, even though he knew a lot, things had changed over the years so he had to do a lot of research and testing. In the end, he put in at least 120 hours on those websites, and though he got things taken care of, since his billable hourly rate is $125, if he’d had a client or been working towards a client he could have possibly made $15,000. At the very least he could have been marketing his business and attained a new client.

It’s hard to decide when to let things go that you can do, but sometimes it’s worth taking another look at your projects and trying to figure out whether it’s cost effective to have someone else do it instead of doing it yourself. Always remember that you can write off all paid services that relate to your business and that might help you make a different decision if you need to.
 

How Do You Analyze Advertising Costs?

If you’re in business, no matter the business, you probably do some sort of advertising to try to get the word out on your business. Overall there’s two different types of advertising; online or offline. Within both of those there are multiple ways of reaching out to your potential customers, and each comes with its specific types of costs and benefits.

watch-clock

Let’s look at offline first. Some ways you might be able to reach others are:

* networking events
* mailers and brochures
* letters
* phone calls
* signs and billboards
* newspapers and magazines

The first consideration, the one most people don’t think about, is how much your time is going to cost if you’re trying to do it all by yourself. What you consider as your hourly rate needs to be taken into consideration before you undertake any of these endeavors to figure out if it’s worth the effort. Even if you hire someone else to do it you have to take into account how many hours they’re going to put into it based on your needs.

The second consideration is how much each item actually costs and your realistic return on investment is hoped to be. For instance, networking events aren’t usually all that expensive to go to so all you lose is time. For most people though it might take upwards of 20 events before you even get a “potential” client; no guarantees. Making phone calls are even less expensive but they can tax your mental toughness because it’s estimated that maybe one in a hundred will allow you to talk to them.

The third consideration is how fluid your business might be. For instance, if you’re changing things all the time then creating mailers or brochures might be a costly investment to undertake. As it regards magazines, you might have changed your entire business model by the time an issue has even left the shop.

The fourth consideration is the potential for longevity. Networking is the only one where you can possibly have consistent visibility with little effort and a low cost.

None of this means you shouldn’t do it; it’s just something you should consider when you’re ready to do any of it.

Now let’s look at online advertising. Here are some ways you might do it:

* website
* blog
* Pay-per-click ads
* content marketing
* video or podcasting
* social media

Here, the first consideration is branding. The reason for this is because, since you’re not directly in front of anyone, your intention is to drive them to your space, whatever that happens to be. Wherever you’re sending them, you’re going to want your brand to be explicit in telling and showing people what you do and how you can benefit them. The best thing about branding online is that if it doesn’t work well for you it can be changed relatively easy; you might not get those early visitors back but there are plenty more people to reach.

The second consideration is what your space is going to be or contain. Having a website of some type makes a lot of sense because even if you meet someone offline and you hand them a business card, if you have your website’s link on the card it might encourage them to stop by for a visit. Here you get to put whatever you want on your website to represent yourself and your business. You don’t even have to build any of these things on your own, but if you do there are templates that can help you get a start that don’t cost that much if that’s the direction you decide to go.

The third consideration is time. Just like above, if you’re trying to do it all on your own it’s going to take a lot of time to do it all. The lucky thing is that online there are automation tools that can help you along the way, but you still have to put some time into it to get it right; or…

You can go with the fourth consideration, which is cost. For instance, to get started with a website, it might cost you $10 a year for a domain name (weblink), as low as $3.99 a month for hosting that link, as low as a one time fee of $100 for a website template and you can be up and running in no time. You can add a blog to your website for free and get template themes free as well (although that can be a bit dodgy).

To create videos or podcasts you might to invest a little bit of money into buying a video camera or recording equipment but it’s relatively inexpensive. Most social media is cost free. Content marketing can be cost free if you want to do all the writing. Pay per click can cost as low as $50 a month for some sites based on your competition.

Sounds good doesn’t it? It can be… if you have some online skills and the time to put into it. If not, then you’re going to have to pay people do handle some of it for you, and in some cases, if you’re looking to do it right, it’s going to be a costly investment, though some of it is a one time fee and the bulk of it is still less than offline costs.

This is an area where looking at your hourly rate comes into play. It might cost you $1,000 to advertise in a newspaper or magazine for 3 months, but you can be earning money while it’s going on.

If you’re handling your own social media the hours you put into it can end up costing you more long term. It might cost you $1,500 to $5,000 for a good website but usually those deals come with at least a one year maintenance plan, which means you can change things up as much as you want without an additional cost. That ends up comparing well with creating mailers and brochures, which you might need to change within a few months.

Overall, your biggest concern is the group you’re marketing to based on what your business is all about. Blogs work for everyone because they show people your expertise and help you build a web presence on search engines. If you plow snow having a website still works, but you’re not going to want to spend a lot of money doing it and, except on stormy days, you’re going to have little use for social media.

If you provide services such as accounting or legal work, it’s best to push the flesh when you can because most of the people you work with are going to be local, and consumers like working with people they get to know. This is where signs and billboards can bring your business great benefits because your local clientele is more important for you to reach visually than people online.

This article is in no way as detailed as it could have been but it should give you an idea of the types of things you should consider no matter which direction you decide to go; you can even do all of it, which could work wonders for your business. The best thing about all of it is you get to write it off on your taxes; that’s why we accountants are here to help you on the back end. 🙂
 

Should Your Small Business Be A Corporation?

We’re not going to lie – having an “INC” or “LLC” after your business name can sound pretty impressive to some of your potential clients. With that said, deciding whether or not to take your business and incorporate it, especially if your business is pretty small, isn’t a decision you should take lightly.

smallbusiness01
by Benjamin Child

There are 3 different types of corporations, each of which is designed to protect the individual in some way. The costs are different depending on which one you choose as well as which state you’re in. At the same time there are both benefits and things to watch out for. Here are some thoughts we have on this.

First, the 3 types of corporations are: LLC (limited liability company); S-Corp & C-Corp. Let’s look at these separately first, just to set the record straight.

LLC‘s aren’t technically corporations. Instead, it’s used to define a company where each of the partners is responsible for sharing the profits and liabilities the company takes on. Each year they have to settle up, and then decide what to do with the profits.

The partners in a LLC might decide to be taxed as a full corporation or decide to be taxed independently. There are a lot of rules involving LLCs and each state treats them differently so it’s smart to talk to both a tax attorney and your accountant.

Some LLC’s are individual owners, and they can decide whether or not they want to be considered as a corporation or as a “disregarded entity. The filing requirements for each one is different so it’s a tough decision to make.

S-Corps offer the opportunity to not have to pay federal tax via the business. Each individual, known as shareholders, would be responsible for paying whatever they take out of the corporation for their personal use, which means if you’re a sole proprietor and you don’t take out all that the corporation earns, you’re only taxed on the amount you took out. This is actually a favorite classification for non-profit organizations since all profit goes back into the company.

C-Corps are the most expensive of all the options and both the organization and the individual gets taxed. Although that sounds bad, there are many protections C-Corps bring you, with the biggest one being if you’re sued it’s only your business that’s liable, not the individual or shareholders.

It also offers the advantage of being able to sell stocks in the company, which means if you’re creating products and need cash, you can obtain money by selling stocks to as many people who are willing to invest in your organization.

Only about 30% of small businesses incorporate, so this isn’t a necessary stop along the way. However, it can be beneficial to certain types of businesses and individuals, which is why it should at least be considered.

One, if you’re working in an area where liability against you could be costly, being incorporated means those you contract with can only sue the corporation, which protects your personal assets and bank accounts.

Two, if you have partners you can protect the business by setting up a legal structure in case the parties decide to break up or one partner wishes to divest themselves of the business. This will protect company assets and give shareholders the opportunity to keep out someone they might not want to work with as a partner.

Three, if you’re the entrepreneurial type who likes putting your hands into a lot of different things, you can tie them all under your corporation to protect them all. This of course might mean needing accounting services to help you keep track of each business but you should have an accountant anyway.

Four, from a marketing perspective you can make your business look more professional. If you work with out of area clients it makes your organization look bigger. You can officially call yourself either the CEO or President of your company, and immediately you’re the major stockholder in the business.

If you’d like more detailed information go to this link and look under the category “Business Types”. It might be beneficial to protect the future of your business.