Small Business Incorporation

When you decide to start a small business the first step should be to incorporate the business. Small business incorporation is the only way to safeguard your assets.

Forming a corporation or llc when starting a business should not be done as a shield to avoid legitimate debts – that’s just bad business and morals, but it is a legitimate way to protect yourself from debts that your corporation or llc incurs. No one plans on starting a business so it will fail, but things happen and being properly set up from the get-go is one of the best decisions any entrepreneur starting a business can make.

Starting a business is a time of great excitement and anticipation. Often times, starting a business is done because youíve come up with a great concept, but before you really consider all that will need to be undertaken.

One of the most important aspects of starting a business is to properly set up a business entity or more specifically incorporate a business. You have a variety of choices here: a sole proprietorship, a partnership (two individuals starting a business), a corporation or a limited liability company (LLC).

Learn more about the various types of business entities here

Many experts will tell you that the best entity to form when starting a business is either a corporation or llc. Why? Simpleóboth of these entities (if run properly) will allow the owner to protect his personal assets from the debts, liabilities, and other financial obligations of the business. The corporation or llc is a separate entity from itís owner (even if there is only one owner).

Letís say that Eddie Entrepreneur is starting a business to sell toasters online. Eddie orders business card and stationary and is billed $1,000 by the printer. Assume that starting a business wasnít a smart move for Eddie and the business fails without ever paying the printing bill. If Eddie is a sole proprietor, the owner of the print shop can sue Eddie personally for the $1,000 since as a sole proprietor, Eddie and his business are one in the same.

But if Eddie was a corporation or llc and followed the proper business formalities, he will not be personally liable for the $1,000. The print shop owner will only have a claim against the corporation or llc and will only be able to collect from the entity.

So it makes good business sense to incorporate a business when you are starting and making sure that your small business incorporation is done in a professional and affordable way.