Friday, February 13, 2009

Should I incorporate?

Every small business has to decide the best "corporate" structure to provide for their business. You essentially have three choices. Sole proprieter, S Corporation or LLC. Their are advantages to all three and the final decision is yours. Which one works for you.

The main difference between the sole proprietership and the others is liability. Both the LLC (Limited Liability Company) and the S Corp (Sub-chapter S Corporation) limit the liability to the assets of the entity. Many prefer this since they do not need to worry about their house or car being at risk.

I have decided for this first project, the risk is minimal at best, so will not go through the process of seeking liability protection. The cost can be quite high. My next project I will create an LLC, so earning can just flow through to me the individual. Each state is different, and you just want to make sure your state recognizes single member LLC's.

My tax guy advises S-corps, and as I learn more I will let you know what he has told me. Of course everyone situation is different and you have to determine what works best for you. There are several companies out there that will help you set up and establish an entity. I have l inked to one below but I know there are several others.

http://www.incorporatefast.com/

Hopefully those who have incorporated can provide resources in the comments as well.

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