Many small business owners understand the benefit of
business incorporation, but they don't realize how easy it is to lose their corporate status if they get sued or end up in bankruptcy. This is dangerous because then the court can come after their personal assets. So, why incorporating is important for small business owners, and then tell you five simple steps you can follow to protect your personal assets, even if your business gets sued or goes through bankruptcy.
It makes sense to
business incorporation for a couple of reasons. For today, we're going to just focus on the personal liability part. When you incorporate, your business becomes like another person. This other person has its own bank account, it can own things like property, and it can take risks. Even if that other person goes completely bankrupt or gets sued, you are safe. This is important because many new businesses fail, but you as the entrepreneur don't want to fail. You want to pick yourself back up and start your next business which will be even more successful. Failure is a necessary way to learn, so we want it to be as painless as possible.
When everything works like it should, then yes, you personally are protected. But there are certain situations where your corporate status doesn't help you out, and every business owner should be aware of them. You see, setting up a company gives you so much protection from liability that unethical people in the past have tried to take advantage of it. They have created businesses just for the purpose of liability protection, to help them get away with various crimes. Many successful business people went through periods of ups and downs in their life.
Not every company they bet on was a success. But they managed to survive and lived to fight another day because they were smart enough to do
business incorporation correctly. They followed the above five steps to make sure they wouldn't lose their corporate status in the event of a lawsuit. They made sure that their personal assets were safe, even if the company went bankrupt. It is also important to know more about the whole process of
business incorporation in order to do it in a proper manner.
For more info: http://www.yogiassociates.ca/