There are a variety of legal structures available when you’re forming a business, but a corporation is one of the best for many businesses. A corporation gives your business flexibility while limiting your liability and providing protection for your personal assets. In this blog entry, we’re going to evaluate several key benefits of organizing your business as a corporation.
- Protection for personal assets.
A corporation protects its owners’ personal assets from business losses. If an employee sues a corporation for ten million dollars because he’s slipped on the stairs at the office, shareholder assets are safe. Without this protection, the assets of the owners –even homes and cars – could be at risk.
Because a corporation is legally distinct from its owners, its liabilities are also separate from its owners. Just as shareholders are safe from personal injury lawsuits, if a corporation defaults on its debts, its shareholders are protected.
- Investor appeal.
A corporation is often the preferred business structure when it comes to raising capital. A corporation can issue stock to raise funds. It also provides credibility – registering as a corporation can create a sense of permanency and professionalism. It’s important, from an investor or lender standpoint, that corporations don’t die with their owners. Theoretically, a corporation can live forever. This relative permanence makes them more attractive to lenders and investors.
- Ownership flexibility.
Ownership of a corporation can be transferred relatively easily. A corporation can be sold or company stock may be transferred to a new shareholder. A partnership or an LLC can be a much more complicated entity to sell, often requiring appraisals, extensive contracts, and further legal activity.
Structuring your business properly is very important – but it’s a decision that many business owners overlook. If you’d like assistance in determining the appropriate structure for your business, we can help. Please contact us today to learn more!
- Simplifying Cal/OSHA Workplace Safety in California - March 4, 2024
- Cracking the Code of California’s E-Commerce Laws - March 4, 2024
- Surveillance in the Workplace: How Far Can Employers Legally Go? - February 21, 2024
