The main advantages of incorporation are 1) liability protection, and 2) tax savings. The liability protection provided by incorporating simply means that if your business is sued and the person suing is successful in getting a judgment, they can only go after business assets to satisfy or pay the judgment.
The corporation provides a shield or protection for your personal assets. This protection is not absolute and often depends on the facts of each case. However, it is a valuable protection and should be considered any time you are involved in business. (For a more detailed discussion of limited liability protection see Part 7 in the Book).
The main disadvantage of incorporating is the cost and extra time involved in getting organized and operating the business as a corporation. Once the corporation is set up, it may not involve much more time than just operating a sole proprietorship. Any business requires that you keep records for tax purposes.
Did you like this? If so, please bookmark it,
