Do you need to change your business structure to a corporation?

On Behalf of | Oct 15, 2020 | Business Law |

When you first start a new business, everything may be tentative. You aren’t sure how much time or resources you want to invest until you know if you can make your idea into a viable, successful operation.

Once you have established that your business concept works and that you are able to run a company, you may need to revisit some of your early decisions and actions to optimize the protections and legal rights of your company.

Changing from a sole proprietorship or partnership to some form of corporation is a common choice made by those with successful and growing businesses. Is it time for you to consider incorporating your business?

Are you about to increase your scale and therefore your risk?

If you’re going to go from a one- or two-person operation to a much larger business, you may need to take out loans and look at all of the options for funding and growing your company. More sales or services and more employees could also mean greater risk for claims and legal liability in the future.

Forming a corporation, such as a limited liability company (LLC), will reduce your personal risk for financial losses if something goes wrong with the business or with the goods or products you provide. It will limit the ability of lawsuit plaintiffs, former employees and creditors to go after your personal assets. There are also tax benefits that relate to incorporation.

Discussing your current business and near-future plans with a lawyer can give you a better idea about whether incorporation is the logical next step for your company