Incorporation is the act of registering your dream business idea or project into a company. The act is of many values to a modern world we are in, ways you can not even start to imagine. I have happened to be part of this process and with a little experience I can gladly encourage on to incorporate.
So you have this idea to do something great and maybe earn a buck out of the whole thing and trust me what I am about to tell you is as legal as they come. So this idea may be producing something, buying and reselling something or just providing a service if you're into that kind of stuff. Then you are stuck in your head without any idea of what to do next but you really want to go through with your idea. Let me tell you this, the first thing you should do is to incorporate your idea into a company for the whole reason of protection before someone steals it and makes it his or her own.
The second reason why you should incorporate your idea is the legitimacy your ǵiving this great idea of your and the sense of security you will get from your peers you will be encountaring in the whole process. This legitimacy will go a whole way in things like getting funding for your idea, getting contracts for the idea and government protection of you as its citizen.
After incorporation you will be able to pitch your idea to potential investors who will be able to invest in your idea for a small piece of the company, this may sound bad to you as some of us wouldn't like someone to share your idea and the benefits to come out of it . Let me tell you that the piece of the pie you will be giving away whenever they provide funding is worth it. Let me give you this scenario.
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You just incorporated with 100 shares in your company and with no funding to pursue let me say you fashion company prospects . You need 10,000USD to set up a shop for your company. This money is going to be needed to provide machinery like sawing machines and to employ 3 more people to help in production. As you are still a young company you will be having your house,apartment,condo as your business premises. You pitch to an investor that you will give him or her 10% of the company for 10,000USD and they accept, so here what you didn't know.
You have got your startup capital for your company benefit number one, by giving him 10% for 10,000usd your company is getting a networth of 100,000USD capitalisation and guess who owns the remaining 90% of the company which is worth 90,000USD. So you just got a networth of 90,000USD for one initial injection of capital into your company.
So it will be upto you to fight hard to use that 10,000USD in capital to turn your dream into a successful and profitable reality hence raising your net worth as your company grows.
Another benefit and this is new to some people is the tax reduction in the matter of service providers. Lets say your a professional dancer and get close to 10,000USD per month in earnings, this earning are going to be entitled to earnings tax or as it is in uganda PAYE(pay as you earn) and it's a progressive tax in most countries where the higher you get paid the more tax percentage you pay, and in my opinion this is another communist way to keep wage gap small but thats me .let's say hypothetically that is a standard tax of 20% of your earnings, but of recent many countries came out to agree on a minimum corporate tax of 15% and yes i said corporate tax. If you incorporate as a single member company to manage your services as a dance, the payments made to your company for your services will now be known as company earnings and will only be subjected to a few tax in our hypothetical case 15% and not 20% . so do you now see how incorporation is getting you richer not poorer. And if you incorporate in a tax haven like Delaware state, singapole, Dubai and others your money will be tax free or charged more less to zero tax and it's perfectly legal. Do more research on the matter for informed decision making
If you're in Uganda and you would like help to incorporate I am personally willing to provide you with the service starting as less as 500,000 ug shs and varies according to your company share capital and specifications. Leave a comment if interested.
