Whenever you are starting a business there are many advantages to incorporating. Most small business either incorporate as an LLC or a Subchapter S Incorporation. This is often determined by the accountant, who can better advise as to tax implications of either. Often businesses with large capital investments may choose LLC, while companies wanting to ultimately provide employee share options may choose Inc.
The advantages include:
- Having a business liable for contact disputes.
- Keeping business assets separate from personal assets.
- Separating business and personal taxes.
- Shielding personal assets from potential liability.
- Access to capital.
- Business security and continuity.
A thorough discussion with your attorney will help you answer if your business can do any and/or all of the above. For example, if you are performing personal services, it may be impossible to immune yourself from a lawsuit if you personally are negligent.
It is also important to establish the business from the beginning. Often, companies “wait until they are big enough” only to then realize that they do not have established practices in place to handle growth. Often the act of getting an attorney and CPA to assist from the beginning is the initial path to success and measured growth.