Should I Incorporate My Business?

should you incorporate if you were
starting a small business you’re likely considering a series of
legal questions such as whether to incorporate the business or operate it as a sole proprietorship or
partnership if you concluded it makes sense to
incorporate a new round of considerations come into play whether to form a limited liability
company called an LLC or a regular business corporation and if
so what type of corporation a subchapter S or a subchapter C this short video will provide some basic
guidance so you can get back to the really
important stuff such as exactly what will the new business sell how will it attract customers where will it
be based who will it employ and how will it make money one
major benefit of operating a new business or a corporation through an LLC is that these entities can
shield the business’ owners from unlimited personal liability of the
business’ actions for example if the new business is
operated as a sole proprietorship or is a general partnership and it sells
a product that turns out to be defective and
seriously injures a customer or the business’ delivery truck
injures someone the business’ owners, the proprietor and
all of its partners, usually would be personally financially
liable for the full amount of the damage if
they have insurance they’ll be protected to that point but not beyond the owners
would also be fully liable for all the debts and obligations incurred by the business such as to banks suppliers employees contractors and the landlord but if the
business is conducted through a corporation or through an LLC and
the legal formalities are complied with the owners would not be personally
liable for the business’ actions or its debts of course if the landlord
insisted on the founder personally guaranteeing the lease or
the bank insists on the founders guaranteeing a loan then the founder would be
personally liable for those obligations because he agreed
to take them on but that’s far better than all of the
owners being potentially liable for everything that’s a major benefit to
using an LLC or a corporation another benefit of
incorporating is that a corporation or LLC provides
continuity for the business if a shareholder withdraws or dies the
entity or business continues and only the owners or the percentage of
ownership will change but if a sole proprietor
passes technically the business ends and his or
her estate steps in of course there are some extra
costs and legal hoops to go through when creating
and operating a business through an LLC or through a corporation
although the process of setting up a corporation or LLC is not complicated getting some advice up front from a
lawyer and from an accountant before you set the
business up is always a good idea and it can save
you lots of money taxes and heartache in the long run

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3 thoughts on “Should I Incorporate My Business?

  1. Limited liability is one of the primary reasons that most businesses choose to incorporate. There are many other factors to consider, so it's important to carefully evaluate the business' needs.

  2. Great video and simple to understand, I incorporated LLP instead is any advice I can get on this please or video you have done previously on this matter?

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