Why Use a
Corporation or LLC?
It is universally
recognized that any small business owner is better off operating his
or her business through a separate legal entity. The added costs are
so minimal compared to the significant benefits.
·
Limited Liability
Protection
·
A Reduced Likelihood of
Tax Audit
·
A More Professional
Business Image
·
More Privacy
Limited
Liability Protection. In today’s litigious society, your
chances of being sued are higher than your chance of being in the
hospital. If you start a new business, those chances get even
higher. Any transaction is a potential for a lawsuit and
anyone can file a lawsuit for years after the alleged incident.
Nothing is fool proof but you can minimize this risk and better protect
yourself and your family by benefiting from the legal liability
shield offered by properly formed and maintained corporations or LLCs.
Without a legal entity, you will have unlimited personal liability
for the debts and obligations of your business.
Reduced Risk of
Tax Audit. You want to minimize any dealings
with the Internal Revenue Service as much as you can. Statistically
speaking, sole proprietorships have a much higher chance of being
audited than a corporation or limited liability company. Although
you can never eliminate your likelihood of a tax audit, it is worth
doing what you can to reduce that likelihood. If your business is
ever subject to an audit, you will spend a lot of money and time
that would be better spent running your business.
Professional
Image. Statistics overwhelmingly show that
customers prefer to do business with corporations or limited
liability companies . . . rather than John Smith’s sole
proprietorship business. Legal business entities portray a more
professional and serious business. Customers prefer this and do
more business with legal entities.
Privacy. By
using a separate legal entity for your business activities, you and
your personal information and involvement will be subjected to more
privacy.
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