You're about to begin something that will impact your livelihood; your future. You have choices to make, and a little information goes a long way. First let's answer a key question:

"Why should you incorporate your business?"

The short answer is one word: "Liability." What this means for a business owner is simple: what is at risk if your business incurred a lawsuit? Despite your best efforts and intentions, accidents can happen, people can feel wronged, and judgements against your business can become a very real and life shattering threat. When it comes to structuring your business, there are two types of liability.

UNLIMITED LIABILITY

Unincorporated businesses have unlimited liability. Your personal assets (the house, car, and checking account) are all at risk of being lost if the business is sued.

This risk also includes any liabilities that occur as a result of an employee's actions. This means your personal assets are in danger for an act you did not personally commit!
Business structures that risk unlimited liability include sole proprietorships and general partnerships.

If you are running a business that has not been registered or incorporated, you are operating a sole propertorship and are subject to unlimited liability.

LIMITED LIABILITY

Incorporated businesses have limited liability. The business is considered separate from the owner(s). In other words, only your business assets are at risk during a lawsuit.
- Business assets are what the owners have put into the business. This include company property, equipment, and business bank accounts.
Unless you knowingly commit a crime, you typically cannot be found personally liable for the actions of the business or your fellow owners.
Business structures that provide limited liability include
Corporations, Limited Liability Companies (LLCs), and Limited Partnerships (LPs).

Incorporate Today