This blogpost is going to be brief and to the point. There are many Benefits and Advantages to registering your business and incorporating your company. In my opinion, these far outweigh the disadvantages.
1. You can protect your personal assets by incorporation
Incorporation is one of the best ways you can protect your personal assets such as your home, cars, or savings. A limited liability company can own property, carry on business, incur liabilities, and sue or be sued. As a separate legal entity, a company is responsible for its own debts. That means creditors of a corporation generally, in certain circumstances, can seek payment only from the assets of the corporation and not from the personal assets of the directors and shareholders. Sole traders, however, face unlimited liability for both personal and business assets even if they are registered.
2. Raising Capital
Incorporated companies and registered businesses generally have a better outlook when it comes to raising capital. Incorporated companies can issue shares of stock and access commercial loans. In most cases, banks seem to prefer to lend money to registered and incorporated entities rather than to ones that are not. In Trinidad and Tobago these registered businesses and companies can access commercial mortgages, working capital financing, revolving lines of credit, term loans, trade finance as well as reverse factoring from various financial institutions. Some financial institutions also offer advisory services to registered and incorporated entities at no additional cost.
3. Perpetual Existence for incorporated entities
An incorporated entity has perpetual existence. The company exists until its shareholders, its owners, decide to end it. So, if all the officers, managers, directors and shareholders change, the company can still exist. It is the most enduring business typology. It lends itself to stability which is attractive to investors and allows for long term planning and strategising.
4. Credibility and reliability
The fact that your business is registered or incorporated would lead your customers, suppliers and business partners to see your business as more reliable and stable than unregistered or unincorporated entities. Registration and incorporation convey credibility, permanence and in a sense, trustworthiness and even professionalism, to your venture. In Trinidad and Tobago your business has to be registered or incorporated in order to set up bank accounts and to qualify for other forms of assistance and facilities, not to mention the fact that registration and incorporation are matters of statutory compliance in some jurisdictions.
5. Anonymity of owners
An incorporated company may give some form of anonymity to its owners. Sole Traders of course do not have this benefit. A company’s owners may be able to prevent their involvement in the company from being public information and protect themselves, to some extent, from public scrutiny.
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