Why Should My Business be Incorporated?

A lot of small businesses start out as sole proprietorships or partnerships.  But eventually most small businesses take the necessary steps to become a corporation or limited liability company (“LLC”).  Most small business owners choose to operate their business as a corporation or LLC in order to avoid personal liability for debts and obligations of the business.      A sole proprietor or partner is liable for all the debts and obligations of the business even if such liabilities are caused by the actions of an employee or partner.  On the other hand, the owner of a corporation or an LLC is not generally liable for debts or obligations of the business resulting from errors or omissions of employees or other owners.   A more detailed discussion of an owner’s potential personal liability for debts and obligations of a corporation or LLC will be set forth in a future blog.

Here’s hoping you find this material helpful.  If you like what you read, pass the information and the website to a friend.  If something you read here raises a question, don’t hesitate to call. 

AND ONE MORE THING:  It is never to early to start planning for retirement.  Contributions by an employer to a qualified retirement plan are deductible.  A 401(k) plan may also accept employee contributions on a pre-tax basis.  Such employee contributions are not taxed when they go into the plan, but are taxed when they come out.  The law has changed, and a 401(k) plan may now accept Roth IRA contributions.  These Roth contributions are taxed on the way in, but are NOT taxed on the way out.  For a younger business owner or employee this is huge, since it means the appreciation in asset value that occurs over a life time is NEVER taxed.  Also beneficial, is the fact that Roth contributions can be withdrawn in many cases if you need the money without incurring income tax or early distribution penalties.  Give me a call if you would like to talk about setting up a retirement plan suited to you and your business.