I’ve been contemplating whether to form a corporation or LLC for my freelance business. My husband put the idea in my head about three years ago. But at that time, I didn’t think it was necessary.

Whenever I heard words like corporation or limited liability, my mind would conjure thoughts of big businesses with lots of employees and a big reputation.

But I’ve come to realize that size doesn’t matter. Incorporating benefits all types of business - large and small.

• Asset Protection: Everyone’s heard a story or two about a business owner getting sued by a disgruntle customer and losing their home, car, bank account, etc. I know…it’s a big maybe. But it’s a possibility, especially if the customer thinks you have something to lose. Incorporating separates personal assets from business assets. If someone sues the business, they can’t touch assets attached to your name.

• Additional Tax Benefits: Sole proprietorship and partnerships receive certain tax advantages. However, incorporating may eliminate self-employment tax, reduce tax liability, and increase the amount you can deduct for operating losses. Plus, you can lease a car in the corporation’s name and write-off the expense.

• Increases Credibility: Having “Inc” or “LLC” accompany a business name adds a touch of professionalism. Not that persons who operate a sole proprietorship or partnership aren’t trustworthy. But corporations have a way of making others feel confident, and you’ll come across as an expert or authoritative figure.

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