Many people go into business for themselves every day, and many of them have a limited knowledge on the protections a corporation can provide. Typically, until they have some need for additional operating capital or are being sued by an unhappy customer, they seldom incorporate. In business, however, the old adage “an ounce of prevention is worth a pound of cure” should be everyone’s mantra.

While there are many forms of business, one of the most commonly used is the corporation, and for good reason. While not appropriate for every business, and certainly not the only form of business, the corporation has a number of advantages over other forms of business, most notably:

• The corporation allows the owners of the business to separate their business and personal assets. A corporation whose owner properly forms and maintains the corporation is generally immune from personal liability for the debts and obligations of the business.
• Incorporating may add instant legitimacy to the business – many businesses prefer to do business with an entity that is incorporated.
• A corporation’s existence is perpetual, meaning that it can be passed on to the owner’s heirs, or even sold (which many entrepreneurs choose to do).
• Tax flexibility. Corporations enjoy certain tax attributes that other forms of business do not.
• The ability to raise capital by selling shares of the corporation to others while maintaining control over the management of the corporation.
• Because the owner of a corporation is generally immune from personal liability for the debts and obligations of the corporation, if the business is sued, the owner’s personal assets, such as homes and cars, cannot be used by the business’ creditors to satisfy a judgment against the business.

Deciding whether to incorporate your business should involve a thorough understanding of the business environment and the complex and confusing laws and regulations which govern the various forms of business entities. Often, these rules and regulations require more than a causal review, and others must be consulted to make the appropriate choices. To avoid finding yourself in the unfortunate position of having your personal assets attached to satisfy a judgment against your business, one of the first things you should do is consider how best to protect and separate your personal assets. Doing so at the outset can save you thousands of dollars.

To understand the rules and make informed decisions about your company and how best to do business in California, you need the services of a knowledgeable attorney. Michael Leonard, Esq. of San Diego Corporate Law is that attorney. To schedule a consultation with Mr. Leonard to discuss incorporation, or to discuss any other business-related matter, you can contact him by visiting San Diego Corporate Law or by telephone at (858) 483-9200.