Why a Sole Proprietor May Want To Consider Creating a Corporation
We run into a lot of businesses that are still conducting their business as a sole proprietorship, sometimes called a sole prop. Here are some reasons you might consider putting your business into a corporation or an LLC instead of a sole proprietorship. Reason number one for using an LLC or a corporation is to shield yourself personally from business liabilities. In the law we call it the corporate veil or the corporate shield. Basically it means that you as the owner or the manager or the operator of the business can’t be sued personally for corporate or LLC liabilities and debts. The second reason to use an LLC or a corporation is that there are often a lot of tax advantages. You just can’t claim those tax advantages if you’re running your business as a sole proprietor. The third reason to consider this is that sole proprietors have a hard time separating out their business from their personal lives, whereas with an LLC or corporation, you’ll have separate bank accounts and separate corporate records. It’s easier to keep track of what’s business and what’s personal.
“If you have an LLC or a corporation, it tells the world that you know what you’re doing in business.”
The fourth reason is that it’s easier to sell an LLC or a corporation than it is to sell your life, which is a sole proprietorship. And having a corporation or an LLC makes it easier to show a buyer what they’re actually buying. And then, the final reason ... I personally feel like there’s a reputation factor. If you have an LLC or a corporation, it tells the world that you know what you’re doing in business. So you’ll get more credibility from using a real corporation. If you have any questions about the decision of whether to use a sole proprietorship, a corporation, or an LLC, here at the Sierra Crest Business Law Group we’re very happy to answer those questions and guide you to the right choice for you and your business. Please give us a call.
691 Sierra Rose Dr., Suite B Reno, NV 89511 775.448.6070 SierraCrestLaw.com
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