Whether you are a full-time independent contractor or are operating your own small business, you may not need to register as a business.
However, you may be required to obtain a business license from your municipality if you make over a certain amount of money in a year.
By not registering as a business, though, you may miss out on personal liability protection, legal benefits, and tax benefits.
By registering as a business, you separate the entity itself from you as an individual, which in turn helps you avoid certain legal and financial liabilities that may occur for your business.
What this means is that if anything is to happen to the business, your personal property or credit may not be impacted or affected as strongly.
Second, it is much more credible and safe for a consumer to work with a business over an individual. As a registered business you are able to protect your personal assets, which is important in the event something goes wrong with your business.
Another great benefit of going the business route is the tax benefits.
As a registered business, you can take advantage of business expense deductions, which means you can use all your business expenses to offset the earned gross income of your business.
Another big advantage is that by taking dividends instead of a salary, you have more flexibility with the company’s income, which allows you to meet diverse needs, especially when starting out.
In conclusion, incorporating a business may not be required, but it is a benefit with a rather small cost. I say that it is worth registering as a business to avoid potential losses.
For more information:
https://corporatedirect.com/blog/tax-advantages-of-incorporating-your-business/
**Thanks to SBDC Team Member Diana Patterson for these insight
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