4 Signs That Its Time to Think About Incorporating
Every successful marketing agency will eventually come to a point where they have to think about incorporation. It’s a common step for owners to take when they’re ready to take their company to the next level, as it prepares a business to grow by creating transferable stocks and reducing personal liability in the company. However, creating a corporation also has its drawbacks – especially for B2B marketing firms. It’s expensive and time-consuming, and if your company incorporates prematurely you could end up losing more money than you make. So if you’re trying to decide whether or not incorporation is smart for your agency, here are a few signs that suggest the time is right.
1) You’ve amassed a lot of personal assets. If you have a great deal of personal assets, it might be wise to enlist the help of an incorporation service. By creating a corporation, owners of a company can no longer be held personally liable for the company’s assets. This protects your personal wealth from lawsuits and debts accrued by the corporation.
2) You want to diversify ownership. Incorporation creates stocks in a company that determine ownership. These stocks are much easier to transfer between owners and founders than equity in a proprietorship – which requires. So if you plan on selling off your equity in the company or bringing another owner on board, incorporation should help expedite that process.
3) You want to expand and hire more employees. Incorporation is generally a good idea if the founders of your agency want to branch out and hire more employees. That way, the company will be responsible for paying employees rather than the individual owners. This is similarly beneficial when bringing on sub-contractors like content writers. Incorporation allows IPs created by contractors to be assigned to a company rather than an individual owner.
4) You’ve created intellectual property. Ownership of intellectual property is a tricky thing to determine. Incorporation makes it easier to sort out to whom IP belongs by assigning it through stock or similar corporate documents. That way, if a founder leaves there won’t be a conflict of interest that could lead to a lawsuit.
If any of these four things sound familiar, it might be time to investigate incorporation for your marketing agency. The process is extensive – you’ll need to establish a board of directors, document your operations and perform other tedium – but it should put you in a better position to grow and succeed in the future. So get online, do some research, and determine whether or not incorporation is best for you.
