Should You Incorporate Your Coaching Business?

Whether your coaching business is new or approaching a new plateau of growth, it may be time to consider incorporating. (And this topic seems especially appropos with tax season upon us!)

What is a corporation? Simply put, a corporation is a separate taxable entity that has perpetual existence. When a corporation is created (whether by one person or many), it assumes its own identity separate and apart from the shareholders (i.e., those with an ownership interest in the corporation). Because of this separate identity, shareholders in the corporation are shielded from personal liability for business debt by what is called the corporate veil (assuming the corporation is validly formed and maintained). This is the primary advantage of the corporate form. Manage­ment of the corporation is centralized in a board of directors.

The corporation requires more formalities than the other forms of business to form and maintain. Failure to comply with these formalities can result in the loss of corporate status. Upon formation, articles of incorporation must be filed with your state registry (usually at the Secretary of State’s office). The necessary forms to obtain a taxpayer identification number with the IRS and identification numbers with the state employment and revenue authorities, now available online in most jurisdictions, must be filed for the new corporation. The taxpayer identification number for a business is akin to a social security number for an individual. See www.irs.gov for details.

Installment 2 Monday!

If this topic is of interest to you, be sure to check out my book Launch Your Practice!

Visit http://www.careercoachinstitute.com/books.htm#Launch for more details!

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