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Many consultants consider incorporating themselves because consultants possess expertise other businesses value. Your insights and knowledge are assets-intangible assets, but assets nonetheless. This is why many people in your line of work consider asset protection for consultants.
Forming a Delaware LLC or corporation for your consulting work is a common way to protect both your personal assets and business. Harvard Business Services, Inc. has more than three decades of experience forming Delaware companies for people who want to protect their assets, including consultants. However, we are not a law firm and cannot give legal advice. Please consult an attorney if you need legal advice on this matter. We can, however, explain why a number of consultants choose to incorporate themselves and point out some important factors to consider.
Typically, consultants incorporate themselves to limit their personal liability. Incorporating your consulting business, even if you're the only employee, creates a barrier between your personal assets and your business. In the event of a legal proceeding involving your company—including breach of contract allegations-your home, cars, bank accounts and other personal assets are typically considered off-limits.
In the earlier stages of your consulting business, startup costs may exceed the business's revenue and create an operating loss. If you form a subchapter S corporation, a tax status that was designed for small companies, or a limited liability company (LLC), you'll pass the tax liability or loss through to yourself and your shareholders (if there are any). Usually, incorporating can provide additional tax benefits, such as the ability to deduct business expenses, and much more.
Those early losses may shelter some of your income when your business begins to generate a profit, which is when the tax advantages will become evident.
Please consult your accountant for more information.
Many businesses prefer to work with other businesses, and having the abbreviations "LLC" or "Inc." appended to your name implies you are a serious business professional. In the event you should ever require a loan for your business, this may also speed up that process, as a number of lenders are more comfortable lending to a company rather than a sole proprietorship.
Ready to protect your assets and incorporate yourself? Harvard Business Services, Inc. makes the process easy for you. Simply click the button below and fill out our order form.Incorporate Yourself Now
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