Business License: The Pros, The Cons

Image Source

Companies and entrepreneurs who want to set up a new business must look at the benefits and disadvantages of registering your business. There are many ways that you can register your business entity. There are options for a limited liability corporation (LLC), Corporation, Partnership, or Sole Proprietorship. However, deciding whether to incorporate your small business is one you must consider when starting a small business. 

What are the pros and cons of registering your business license, though?

Well, the pros of registering your business license are several. You can achieve many things once you have had your business license registered. That means receiving funds and being an acknowledged entity by your target audience – and other companies.

On the other hand, some cons include large costs due to taxation, depending on what state you are coming from. 

You can read more about it in this article. These are: 

1. Tax Benefits

The owners of corporations have taxes on their salaries and bonuses. However, you may also need to learn the process of taxing dividends. There are also tax benefits that other corporations have obtained. These include insurance premium deductions, deferred tax payments, and income splitting.

2. Credibility

After a business has become incorporated, it can make a favorable impression on investors. As a result, the process has been credited with making it easier to raise capital! There are also interesting cases where businesses can get perceived permanency and reputability from clients or customers when a business is a corporation.

The legitimacy that a business license gives a business is priceless. It also serves as a reminder to customers that they are dealing with a new but legitimate business, as today’s market has changed. New businesses online have to deal with this climate, and there has been more pressure on them to show their license copy and load up on the legitimacy and efficiency of their products and services. 

3. Perpetual And Continued Existence

A corporation can exist – and outlast the death of its owner or its owner leaving the business. It will also continue to be in existence until the shareholders will take the measures to dissolve it. In other cases, it can be merged with another business. 

4. Cost

One of the unfortunate downsides of the business license is the initial costs. These costs usually come with incorporation, as they might include the fee required to file and legitimize your articles of incorporation, potential attorney or accountant fees, and the cost of using an incorporation service to assist you with completing and filing the paperwork. 

5. Loss Of Personal Ownership 

As a corporation is considered a stock corporation, no one has complete control over the entity. Instead, the corporation has another entity that governs it. The corporation does it – with a board of shareholder-elected directors. 

One person doesn’t retain complete control if a corporation is a stock corporation. Moreover, as you form a corporation, there are state-outlined rules that you must follow. These may include the corporation management, requirements, and accounting practices. 

Business permit renewal should not be forgotten, too! 

Wrapping Up

In this case, one can call the license a pro and con. However, nothing means more to a business than its recognition one way or another. 

Author’s Bio:

Angelo Castelda works as a contributor for a news magazine in Asia. He loves to learn and understand diverse cultures and aims to share through his writing his experiences around the world.