Why incorporating your business as a limited liability company (LLC) may be your best business decision yet.

Why incorporating your business as a limited liability company (LLC) may be your best business decision yet.

October 19, 2018

When a business is incorporated, it simply means the business has completed the process of becoming a corporation, as recognized by law. If that business is incorporated as a limited liability company, it then means the company is a legal entity in its own right, separate from those who own it, the shareholders. Registering a limited liability company may not be the cheapest to set up but the benefits are numerous

It simply means a business has completed the process of becoming a corporation, as recognised.

  1. ASSET PROTECTION

When a business Is duly registered as a limited liability company, it is recognized under law as a separate legal entity separate from and apart from its owners. It is responsible for its liabilities and its debt thereby protecting its owners from personal liability and corporate debts.

2. CORPORATE IDENTITY

In the eyes of the law, a registered company is a legal person. It can sue and be sued, it can buy property, contract and be taxed.

3. PERPETUAL LIFE

Corporations are the most enduring legal business structures. The life of an incorporated company is not dependent on the life of a particular individual(s), manager, shareholder, director or officer. It can continue indefinitely until it accomplishes its objectives, merges with another business, or go bankrupt. This means that by incorporating your business, you may be able to avoid the legal entanglements that could result with other business structures. In other words, unless stated otherwise, an incorporated company could go on indefinitely.

4. TRANSFERABILITY OF OWNERSHIP

When a business is incorporated, the ownership interest you have in it can be readily sold, transferred, or given away to another family member. The divesting process in proprietorships and partnerships can be costly and cumbersome as property has be retitled, new deeds drawn, and a whole lot of other administration processes have to be done to transfer ownership. This is not the case with incorporated businesses as all of the individual owners’ rights and privileges are represented by the shares they hold which can be easily transferred, sold or otherwise disposed off by completing/signing a transfer form. This is a very straight forward and easy process.

5. ABILITY TO BUILD CREDIT AND RAISE CAPITAL

It is a lot easier for incorporated businesses to raise capital since a corporation can issue shares making it easier for the company to grow and develop. As an incorporated company, getting loans from the bank is a lot easier as banks would rather lend money to an incorporated business than an unincorporated business venture. This is because corporations generally have access to more alternative sources of capital through which they can pay off debts.

6. ENHANCE YOUR BUSINESS CREDIBILITY

When a business is incorporated, the business is more likely to be viewed by customers, suppliers and other business associates as being more stable than unincorporated businesses. In a sense, the word “Limited” after the business name conveys permanence, credibility, and stability, and also communicates your commitment to the ongoing success of your business venture.

7. GAIN ANONYMITY

If you want to run a small business and don’t want your involvement to be public knowledge, your best choice may be to incorporate a company. Incorporation can offer anonymity to its owners.

8. TAX SAVINGS

As a separate legal entity, a corporation is taxed based on its profits. Those taxable profits can be reduced by qualified business expenses which could include operating costs, marketing and advertising expenses, travel and entertainment expenses, and other costs. Other deductions that can be made by an incorporated business includes employee salaries, health benefits, and pension contributions.

Best regards,

Efe Ugboro

CEO, 618 Bees

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advise, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advise from the particular facts and circumstances at issue from a lawyer.

This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached

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Frequently Asked

  • What additional documents do I require to file my Annual Returns?
  • Do I need a Company Secretary?

    A limited liability company (LLC) must have a company secretary.

  • What is SON?

    SON stands for ‘Standards Organization of Nigeria’

  • How many directors do I need to start a company?

    A minimum number of two (2) directors is required to form a company.

  • Can I trademark my logo and name separately? Why is this a good idea?

    Yes you can. The advantage is that it gives you the opportunity to have more than one logo or the opportunity to change your logo easily as opposed to registering the name and the logo as one trademark.

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