Recently I’ve met with a couple people about their
business. As we talked, I learned
that both were operating their companies as sole proprietorships. In the good old days that may have been
the way to go, but in our litigious society, you want your business to be
anything but a sole proprietorship.
The main reason is that a sole proprietorship doesn’t
protect you the person from you the business. Meaning, you the person can be held liable if your business is sued
for whatever reason by a disgruntled employee to a disgruntled customer to a
disgruntled vendor. They can sue
your business, and let’s say they win and your business doesn’t have the assets
to pay the claim, well, your house and other personal assets can also be seized.
Setting up your business as a corporation is the best way to
protect yourself. You’ll want to choose
either an S Corp or C Corp or LLC.
Take a read and understand the differences between the corporations.
Setting up a corporation is easy. I always recommend that your attorney take care of
it. And it doesn’t cost a lot of money either.
In fact, the amount of money you’ll spend on setting up a corporation is
well worth the piece of mind you’ll get from knowing that your personal assets
There are tax implications for each type of corporation, so
be sure to consult with your tax professional so you completely understand the
differences and how they may impact the type of business you own.
While there are a myriad of online sites that can help you
set up a corporation, only your accountant and attorney can truly help you
understand which type of corporation is best for your business.
If you don’t have your business set up under a corporation,
now’s the time to take of this important endeavor.
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