STARTING A BUSINESS?
TAKE THE MOST IMPORTANT FIRST STEP

Starting a business is a time of great excitement and anticipation. Often times, starting a business is done because you’ve 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. 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? Simple—both 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 it’s owner (even if there is only one owner).

Let’s 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 wasn’t 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.

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.

Incorporate Your Business Now!

Which Type of Corporate Entity is Right For You? Click to Find Out!