As more laid-off workers move into the entrepreneurial realm, business incorporation is becoming a more prevalent topic and makes identifying the right time and reasons to incorporate critical.
One key reason to incorporate is when an entrepreneur has significant personal assets to protect, such as a home, a car or substantial savings in his or her bank account. Incorporating a venture will ensure that personal assets remain untouched in case of a lawsuit.
Additionally, when a business begins to add partners or hire employees, it is prime time for incorporation. Expansion is exciting, but it should be done with risk management in mind, Nina Kaufman writes for Fox Business.
For example, Kaufman recounts how Ann Siegle of Tria Marketing and Design handled the process.
"Early in her serial entrepreneurship, when she added employees to her home-based design firm, she made the move from sole proprietorship to S Corp, which offers some tax benefits a regular corporation doesn't. Upon going into a second business with partners, Siegle sought the structure and liability protection of a limited liability company," Kaufman writes.
When a business is considering incorporating, it is a good idea to contact an attorney who has substantial experience with the process.