1. Most businesses form an entity to limit their liabilities. So you want to separate yourself from your business. Should something go wrong, should someone sue your business, your business would be held separate from your personal life. So, liability is reason number one.
2. You gain tax advantages. Companies are able to write off certain things that individuals may not be able to write off and amortize. For tax purposes, it might benefit you to form an entity and run your operation as a company.
3. It just gives your business a professional image overall. When you are first starting out, and it’s just you, acting as a company could make you appear more serious and established than if you just operate as an individual.
4. Partnerships! You may plan to start the business with someone else, or maybe you will be partnering with someone in the future, or you expect to attract investors who will get a stake in your company. When you are dealing with an entity, it is very easy to assign shares of your company to somebody else. So, should you sell it, or should your partner want to exit or maybe sell their share to somebody else, it’s much easier to do when you are dealing with a company than when you are dealing with a business, which is in just an individual’s name. If you are starting this business with a partner, it might be better to form an entity and outline your percentages, responsibilities, and liabilities between you and your partners.
5. Also, as we discuss in our freight broker training course, you should consider the potential sale of your business. If your business grows and makes a lot of money, there will be potential opportunities to sell it to other, larger brokerages. It is much easier to sell an entity than your individual book of business. I know you’re starting small, and you’re not thinking about selling just yet, but in the future, this issue may come up. So, that is yet another reason why you should form a company.
Another thing to consider is that forming a company doesn’t cost all that much money. Usually, it only costs a few hundred dollars. You can do it on your own by going to your local Secretary of State’s website, or you can use a company formation service. There are many of them on the internet, and they will do everything for you and only charge you a little bit extra for processing applications on your behalf.
Are you thinking about becoming a Freight Broker or a Freight Agent? LearnFreight offers Online Freight Brokering Training Courses which are suitable for people not familiar with transportation industry. Learn more about our training by visiting Training Details page or choose your course here.
