One thing many entrepreneurs and
budding business owners think about is whether to incorporate a business. While forming a corporation or a limited
liability company (LLC) can cost a little time and money in the short term, it
can actually save you a lot of time and money in the long run.
The primary benefit of forming a
corporation or a limited liability company to operate your business is that, by
doing so, you protect your personal assets from your business debts,
obligations and liabilities. That is, when you form a corporation or a limited
liability company and fund it properly, the entity becomes a separate “person”
in the eyes of the law so that when the business becomes subject to a debt,
obligation or liability, only its assets (i.e., the money and other assets that
exist at the time of the debt, obligation or liability) can be taken and not
the personal assets of the person or persons that own and/or operate the
business. This is what is referred to as the “limited liability” you
receive when you form a corporation or a limited liability company. In other words, your liability is limited to
the assets in the corporation or limited liability company, and your personal
assets are protected.
Deciding whether or not to form
a corporation or a limited liability company for your specific business
requires an analysis of the debts, obligations and liabilities likely to be
faced by the business. In other words, the business person must analyze,
with the assistance of a qualified professional, the types and amounts of
liabilities that are likely to arise in the conduct of the business. If
the potential liabilities of the business are significant, then a limited
liability entity, either a corporation or a limited liability company, should
be carefully considered.
If you live in the San Francisco Bay Area and are
considering starting a business, or you have already started a business that is
not currently incorporated, contact Jeffrey Miller to find out how he can help
you strategize. (650) 321-0410 or
jeff@jeffmillerlaw.com