Should I Use a Business Entity?

The correct business entity is often discussed but sometimes not discussed are the reasons whether or not one needs to organize or incorporate your business. A business is not required to be organized or incorporated. What is the main reason for choosing a type of entity?

The most important reason to choose a type of business organization is liability. When you organize or incorporate your business in a form such as an S Corporation, C Corporation, LLC or a different type, you establish a new entity separate and apart from yourself. That entity is conducting business; therefore, that entity is responsible for any liabilities that arise while operating the business. An employee has an accident while working in the warehouse? A vendor sues regarding a contract? A former employee alleges discrimination? You are personally responsible for those situations if you are not properly structured as an entity. If you are properly structure as a separate entity then the liability remains with the business entity itself except for some very extreme and unusual circumstances.

Organizing or incorporating your business protects your personal assets and causes debts and judgments against the business to remain debts and judgments of the business.

There are many additional reasons to organize or incorporate your business including raising capital, management of company, succession, credibility, stability and many other reasons.

There are many reasons to select a business entity for your business. Jeff Roper is happy to help you with the process.