As a law firm with a focus on business, we are typically asked by our clients on the value of incorporating their business, either as a Limited Liability Company (LLC) or a Corporation. Once you begin to do business, you are considered a sole proprietor or a partnership, depending if you are business by yourself or with other individuals or businesses. A sole proprietorship and partnership do not allow for asset protection for the personal assets of the business owner(s). Income from the business is counted directly on the individual’s tax return. With a sole proprietorship or partnership, your personal assets could be at risk, either by creditors or receiving a judgement against you in a lawsuit.
When you make the decision to incorporate into an LLC or Corporation, you will get asset protection for your personal assets. Typically, in these situations, creditors and judgments will not be against your personal assets, if you have properly complied with the business structure and not pierced the corporate veil. With both the LLC and the Corporation, you receive these protections. While many people assume because the name of the LLC has Limited Liability in it, it is the better entity due to having more protections, but this is not true. A corporation can allow for the same protections as an LLC. Deciding on an LLC or a Corporation deals more with what the business structure is and different tax planning, not on protection levels.
Please give us a call to schedule a consultation when you are ready to incorporate your business at 864-699-9801.