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Posted by John Wells
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The first step that you will need to take when you decide to start a corporation is to determine if you should incorporate your business. Luckily, determining if you should incorporate your business or not is not very hard, you just need to ask yourself why incorporate. By answering the question honestly, you will determine if incorporation is right for your business needs, but you will also be able to determine what business form will work best for your business.
The main reason that people choose to incorporate their business is to obtain protection from any debts and liabilities that the corporation incurs. Business owners do not want to be personally responsible for any debts or liabilities that the business incurs so they choose the corporation form of business because a corporation is considered a separate legal entity; they are responsible for themselves.
If this is your reason for starting a corporation, you might want to think twice about forming a corporation for your small business. The reason for this is that the liability protection that a corporation provides does not work for everything. For example, if you have an employee and they were involved in an accident where somebody was hurt while they were delivering something for work, your corporation could be held liable through vicarious liability, although your personal assets would be protected.
One of the advantages to incorporating your small business is that you can gain an increased reputation for your small business. Many times, just by being able to include the “Inc.” or “Corporation” after your name your business venture will be treated with more respect. You can also gain some tax advantages by forming a corporation, but not all small business will be able to benefit from this.
The important thing to remember is that when deciding on if incorporation is the right step for your business; you will want to talk to your attorney and accountant so you can get all of the facts before making your decision.
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