Do I Need A Corporation to Operate My Business?

While it is not legally necessary that a person operate their business as a corporation or as another business entity like a limited liability company, in many cases it is advantageous. A business entity such as a corporation or a limited liability company can offer the owner important limitations of personal liability for claims arising out of the operation of the business. In this way, a business owner may succeed in protecting his or her personal assets. If a person operates a business as a sole proprietor or as a partnership, there is typically unlimited personal liability for any obligation arising out of the operation of the business. If a person operates as a corporation or limited liability company and follows all the legal rules, the owners are not liable for obligations of the company as long as those obligations do not arise out of the owner’s own personal negligence or wrongful acts or the owner has personally guaranteed a business obligation.

There may also be tax advantages as a result of operating your business as a corporation or limited liability company as opposed to a sole proprietorship or partnership.

Only after consultation with an experienced business attorney and a tax adviser can you determine which business entity offers the most benefits for your unique business needs.