Why Use a Corporation or LLC
1. Asset Protection
Thousands of lawsuits are filed daily, many without any merit, filed by people looking for easy money. In our lawsuit-plagued world, using a corporation or an LLC to separate you personally from all of the potential liability in your business is almost a legal necessity. When you do business with the public or have employees, you open yourself up to the potential of lawsuits. A properly run corporation can save your assets and give you peace of mind.
2. More Deductions and Tax savings
There can be more tax deductions available to corporations than to businesses that are not incorporated. Talk to your accountant and see if it will work in your situation.
3. Estate planning
The late Sam Walton, of Wal-Mart store fame, placed his business assets in a closely held family corporation giving each one of his four children 20% of the stock. He and his wife together owned the remaining 20%. The family’s corporation became worth billions of dollars but, upon Mr. Walton’s death, there was no estate tax due! Why? Because the company was owned by his children and his wife. And, a surviving spouse does not pay taxes on the estate, so Mrs. Walton was also able to avoid paying estate taxes on her portion of the assets. This saved the Walton’s billions of dollars in taxes, all by using simple corporate tax strategies. The Walton’s net worth today is over 115 billion dollars, but without the advance estate planning that Sam Walton did, their net worth could very well be worth just a fraction of that.
It is very important to plan in advance, so that your loved ones can avoid having to sell most of the estate’s assets to pay the taxes on it.