There are many advantages to incorporating your business. The number one reason most people incorporate their business is to protect your personal assets. Incorporating helps to separate your personal assets from that of your business. A corporation is a legal entity that exists separately from you as an owner or shareholder. Typically, shareholders are not liable for the debts and obligations of the corporation whereas in a partnership or sole proprietorship, the creditors can sue for the owner's personal assets.

Corporations have opportunities to take full advantage of tax laws. The corporation is flexible and powerful for the owners of the corporation for taxable issues. The owners of a C corporation are able to set their salaries, determine how much income tax is payable at the corporate level and how much will be distributed to the employees, and shareholders. This flexibility may create a chance to decrease the overall tax liability for the corporation in a given year.

An S corporation does not pay corporate income tax since its income, deductions and credits are passed through to its shareholders. The shareholders of the S corporation include their share of the corporation's income, deduction, loss, and credit on their own income tax returns.