Registering your small business might seem like a big step, but it's a good idea for new business owners. As the owner of a small or medium-sized business (SME), you want to build and protect your brand. You also want to make sure that if something goes wrong with your business, it won't hurt your personal finances.
Registration protects from being held personally responsible
Formalising your small business, which means turning it into a legal corporation, helps protect your personal assets. Limited liability is the legal structure of a business or organisation in which a profit loss can't be bigger than the amount of money that was put into the business. When you are a registered business owner, you protect yourself from being responsible for any liabilities or debts which your business could incur. This structure also protects all business owners and partners, depending on the size of your business.
Help with the law and taxes
Getting your business registered gives you a number of legal and tax benefits. When your small business starts making money, the government sees you as a sole proprietor. This means that you run the business under your own name and pay business taxes on your own tax return. In the eyes of the law, you and the business are the same legal entity, which may not be in your best interest.
Taxes on businesses, or the money spent on taxes, is another reason why many small businesses choose to become corporations. Registered businesses only have to pay taxes on salaries, wages, and extra pay, such as holiday bonuses. Also, if your business is registered, you can deduct from your taxes insurance premiums and other employee benefits like free meals or activities.
Better reputation for a business
Getting your business registered can also help get the word out about your brand. Once you've finished registering, you'll be able to make a better impression on possible business partners or investors. This means that your profit could go up and you'll have more money to spend on marketing, which helps build the credibility of your business. Even better, because you've made a good first impression, potential clients and customers will be more likely to choose your business over others in the same industry.
It's easier to get a loan for a business or open a bank account
Another benefit of registering a company is that it empowers a business owner to set up a business bank account and apply for a simple bank loan. One of a company's most valuable assets is its bank account. This can be done by showing clear proof that the company is registered. Another benefit of registering a business is that it makes it easy for lenders and investors to give you a loan.
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The bottom line
While registering your business feels like a big step, it’s also a necessary one. You need to ensure that your business is freed up to grow as it needs. You never want to be held back by the fear that your personal assets are at risk. This unconscious fear may prevent you from taking the necessary risks to grow your business. Further to that, registering your business opens other doors to getting access to working capital and securing partnerships. To fund this next stage of your business’s growth in the next 48 hours, contact Merchant Capital today.