Operating a corporation form of business is much more advantageous than to the other forms like sole proprietorships. The tax and legal system provides several benefits and relative immunity specifically to the corporations and their owners.
Among many of the major and minor dubai corporate tax consultants advantages, you will find the following as most relevant and useful for your own business corporation.
Owners at Ease with Business Liabilities: A Legal Protection
The biggest advantage of operating a corporation is a legal shield provided to its owners from their business related liabilities. Majority of the corporation owners prefer this legal protection. A corporation has its own locus standee in terms of both legal as well as the taxation. Separation of legal and tax entities enables a corporation for incurring debt and liabilities related transactions as an independent business entity. As a result, the owner remains free from the liabilities and enjoys relative immunity from the business debt.
Such type of business arrangement becomes very crucial if it is a risky venture involving various types of legal and tax complications. It is also equally pertinent if the owner of the corporation is wealthy as well.
However, the protection under law is not limitless and becomes open to all such applications when the lender makes it mandatory to possess a guarantee of the corporate stakeholders against any corporate debts.
Tax Deductions with Fringe Benefits
Tax advantages related to the fringe benefits are a plenty for a corporation. Various types of tax deductions can be availed favouring the business, employees, and family members of the owner. The benefits are equal even if you are the sole stakeholder in the business.
Miscellaneous tax advantages available to all include health insurance, life insurance, travel insurance, entertainment expenses, and several others. There are specific deduction slabs that could be advantageous for everyone in your business. For instance, business corporations have been allowed to deduct 100% medical insurance premium paid.
Another intelligent move would be to remove the self-employment tax cap and by reducing the investment in "Social Security Tax" along with the "Medicare Tax." Individual's tax liability thus also is reduced this way and you become an employee of your own corporation.
Deriving Tax Deduction Benefits with Business Losses
Business losses incurred, if any, also come under the purview of tax deduction benefits and give you a safe hand. There are no upper ceiling limits for incurring business, capital, and operating losses. Meaning thereby, you can freely carry forward or carry back your losses to the previous as well as the subsequent tax-years.
On the contrary, the business entities that are not incorporated legally have to face far stricter provisions and do not enjoy limitless transitions of business and corporate losses. For instance, in case of a sole proprietorship business entity the owner is not permitted to claim a tax deduction for a business loss incurred for more than $3,000 if there are no offsetting capital gains.
Sharing and Shifting Income for Tax Benefits
Among other benefits of incorporating, the 'Income Sharing' is an important factor. In simplest terms, it is an act of dividing the income among the business, the corporation, and its shareholders. An intelligent tax consultant would design this division in such a way that the overall tax liability automatically comes down substantially.