Is Business Incorporation Necessary For My Small Business?

Even if you're the owner of a very small business, business incorporation could be a wise move toward protecting both your company and yourself. Just consider what could happen without that protection.

Trucking is a small business enterprise many people have entered. In some cases, a person may own a single truck. That truck provides the livelihood for the person and (often) his family. Apart from the truck itself, the owner may have material possessions. Perhaps those were purchased with the proceeds of the trucking enterprise or from totally separate work efforts.

Then an accident occurs and the truck driver was found at fault. If a lawsuit follows, the truck owner may think the insurance company will cover any and all expenses. That's not necessarily true. In fact, the truck driver could personally be found liable for a portion of the expenses of the lawsuit. In that case, the truck driver's other assets - personal property that has no real connection to the truck other than being owned by the same person - could be forfeited to help cover expenses of the lawsuit.

This potential for liability is among the chief reasons for forming a corporation of any type. That means that business incorporation is a good option if you're looking to separate and protect the personal assets from those of the company. There are additional benefits and you'll find some regulations governing the actions of your company if you choose this route.

The need for this separation provided by business incorporation by no means stops with a trucking company. Almost any company that provides a service, sells a product or performs work could be in a position to be liable for the actions of the person or product. A computer technician could be held responsible for lost data, corrupted files or even lost revenue if the work performed doesn't hold up. As you can see, almost any business enterprise could be in a position to be liable for its actions.

While business incorporation doesn't guarantee that the owner of the company will face zero liabilities, it does make a difference. Find out how much business incorporation could help you. Contact an attorney, financial advisor or business consultant to discuss the possibility of entering into a business incorporation. Carefully consider both the benefits and the additional regulations before taking the step, but you'll likely find that the additional regulations are well worth the benefits of business incorporation.

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