| You've decided to form a small business and are | | | | from personal liability for the debts of the business. |
| worried about liability among other things. The obvious | | | | Lucky me, but what about the really valuable assets? |
| answer is to form a business such as a corporation or | | | | Google has many valuable assets ranging from the |
| limited liability company...or is it? | | | | name to the servers to the patented advertising |
| There is a certain innate momentum that happens with | | | | systems and so on. Well, guess what? If Google gets |
| commonly understood concepts. When it comes to | | | | sued, all those assets are exposed to the lawsuit. Sure, |
| starting a business, everything you watch/listen to/read | | | | I get to keep my house, but how will that measure up |
| will tell you to form a business entity for tax and liability | | | | to the fact I just lost control of the Google search |
| purposes. Depending on the source, a great amount of | | | | engine? My home will be a nice place for the wake |
| bleating will then be undertaken discussing whether the | | | | after I throw myself off a bridge somewhere! |
| corporation or LLC is the best entity to go with for | | | | Should you form a business entity for your business? |
| your business. | | | | Yes. The question is what do you really want it to do. |
| You will note I use the word "bleating" in the paragraph | | | | If the business will have a lot of valuable assets, say |
| above because that is exactly what is occurring. The | | | | manufacturing equipment, then just incorporating isn't |
| concept of using a business entity is so engrained in | | | | really doing much for you because it leaves all that |
| the business mentality that many people form one | | | | manufacturing equipment exposed. Might not it be |
| without really thinking the process through. This can | | | | better two form one business entity to own all the |
| result in catastrophe when things go wrong or the | | | | valuable assets and another entity to lease those |
| incorrect positioning of an entity when things go right. | | | | assets and carry out the main business idea? Of |
| Let's consider a simple example. | | | | course. |
| Why do you incorporate your business? The common | | | | When it comes to creating an entity strategy for your |
| answer is to protect you from personal liability should a | | | | business, don't stop at the idea of protecting yourself |
| lawsuit or debt arise from the activities of the business. | | | | from the liabilities of the business. Many times, the |
| Nobody can argue with that, right? Not really, but the | | | | business assets are far more valuable than anything |
| problem is that argument entirely misses the point in | | | | you own. Take the time to think it through. Try to |
| many ways. How so? Well, what if your biggest | | | | separate the risk from the value. Once you do, then |
| assets are in the corporation that is getting sued? | | | | you will know the entities you need and how to |
| Assume I come up with the concept of Google. [I | | | | proceed. |
| wish.] I form a corporate entity. I am now protected | | | | |