Factors in Determining Whether to Incorporate
May 31, 2012
Individuals forming new business enterprises, or perhaps those whose business enterprises have matured to the standpoint of pursuing the next level, often approach their accountants and attorneys when considering whether or not to incorporate. Really, the term ‘incorporate’ is euphemistic for whether an individual, and in some cases multiple business partners, should proceed or continue to proceed, on their own behalf, or alternatively, form a limited liability entity pursuant to the laws of the respective jurisdiction. The question of whether to engage in business operations in an individual capacity, or to form a limited liability entity within which to conduct business operations, is generally a question answered by a thorough analysis of the respective liabilities and tax implications.
The simplest manner of doing business is in the form of a sole proprietorship. That said, a sole proprietorship is a bit misleading by name, in that it is not a business entity, but rather the absence of a business entity. There are no registration or filing requirements, and simply engaging in the business operation commences the sole proprietorship, in the individual’s own name, or on their own behalf. As a result, an individual who engages in a business practice as a sole proprietor personally exposes himself to any liabilities that could arise as a result of such business operations without any legal protection from same.
While an individual doing business as a sole proprietor may register a fictitious name in which to conduct his or her business by filing a DBA certificate in the community in which the business operates, from a legal standpoint, the fact that the business operates pursuant to a fictitious name has no bearing or legal affect relative to liability. …
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Westfield Evening News
May 31, 2012