There are three primary reasons to use a corporation to own your business today: (1) Liability Protection, (2) Tax Savings and (3) Accelerated Retirement. To make the most of it, you need to understand how a corporation actually works, and how you can take advantage of what it has to offer you in the way of tax savings, lawsuit protection and retirement planning opportunities.

Lawsuits and the Liability Shield.

The USA is home to over 90% of the world's lawsuits. One out of every five people in the U.S. will be involved in a lawsuit, and if you're a business owner, professional or own real estate your chances go up to one out of three. Unincorporated business owners (which are called 'Sole Proprietorships) are the most at risk. Under the law, the sole proprietor and the business are considered one-and-the-same person. By contrast, a business run from inside a corporation is considered a separate 'person' in the eyes of the law - that is, you are not the corporation and it is not you. Its debts and liabilities are not yours - so long as certain guidelines and formalities are followed. Moreover, if you avoid co-mingling the assets and expenses of the business with your personal assets and expenses, you can sidestep the 'alter ego' theory advanced by many trial attorneys.

Tax Savings Can Add Up Quickly.

The tax advantages are a key reason to incorporate. In fact, certain deductions are available only to enterprises that do business through a company. In addition to business deductions for normal operating expenses, there are many that can provide new opportunities - company owned vehicles and aircraft, education and seminars, business-related travel, are among the many deductions available. Expenses such as telephones, health insurance, life insurance, marketing and advertising, bigger retirement benefits and even dining out are deductible to a company if business-related and properly documented. Moreover, with proper guidance the company can actually build corporate credit that is entirely separate and can provide relief to the burden many business owners have on their personal credit. With the savings that can be enjoyed, you can more rapidly build a retirement nest egg.

Accelerated Retirement Planning.

One of the best things about having your own corporation is that you alone can control the size and timing of your retirement income by the choices you make. You are not beholden to someone else who decides when, how or even if you should benefit.

401(k) Plans, Defined Benefit Plans, long-term care coverage and Welfare Benefit Plans are just a few of the ways you can reduce the tax impact on your company's stream of revenue. Not all of them require a 'matching' deduction for employees. Certain of these can benefit 'just you' or your 'key employees'. The deduction amounts are generous - and the challenge of course, is the timing. It's not always easy for every business owner, but by having the discipline to consistently make contributions to your own retirement future, you not only save on income taxes today, but you can accumulate significant wealth that is safe from lawsuit creditors.

Work with a CPA that is not just a 'financial historian'. Set up your corporation in a state that puts limits on liability exposure, and register it to do business in the state in which you reside. A corporation can provide a liability shield, a way to reduce taxes and to accelerate the amount and the timing of your retirement. Don't let fear stand in your way.