Registering your small business might seem like a big step, but it's a smart move for new business owners. As the owner of a small or medium-sized enterprise (SME), you want to build and protect your brand while ensuring that your personal finances are safeguarded if something goes wrong with your business.

Registration Protects from Personal Responsibility

Formalizing your small business by turning it into a legal corporation helps protect your personal assets. Limited liability means that a business’s losses cannot exceed the amount of money invested in it. As a registered business owner, you shield yourself from being personally responsible for any liabilities or debts incurred by the business. This structure also provides protection to all business owners and partners, depending on the business's size.

Legal and Tax Benefits

Registering your business offers numerous legal and tax advantages. Once your small business starts generating revenue, the government views you as a sole proprietor, meaning you run the business under your own name and pay business taxes on your personal tax return. However, this may not be in your best interest, as you and the business are treated as the same legal entity.

Businesses typically benefit from corporate tax structures, as registered entities pay taxes only on salaries, wages, and additional compensations, like holiday bonuses. Additionally, registered businesses can deduct insurance premiums and other employee benefits, such as free meals or activities, from their taxable income.

Improved Business Reputation

Registering your business can enhance your brand's visibility and reputation. Once registered, you can make a better impression on potential business partners and investors. This can lead to increased profits and more funds for marketing, which helps establish your business's credibility. A strong first impression will make potential clients and customers more likely to choose your business over competitors.

Easier Access to Loans and Bank Accounts

Another significant advantage of registering your business is that it enables you to open a business bank account and apply for loans more easily. A business bank account is one of the most valuable assets for a company, and having clear proof of registration simplifies this process. Furthermore, lenders and investors are more likely to provide loans to registered businesses.

The Bottom Line

While registering your business may feellike a daunting step, it is a necessary one. You need to ensure that your business is positioned for growth without the fear of putting your personal assets at risk. This fear can hinder your willingness to take necessary risks for growth.

Additionally, registering your business opens doors to working capital and potential partnerships. To fund the next stage of your business’s growth in as little as 48 hours, contact Merchant Capital today.