There are a surprising number of small businesses and startups who never file as a specific type of business structure. While it’s perfectly fine to run as a sole proprietorship or partnership, you should at least know what that means from a legal perspective.
If you’re a sole proprietor or a partner, your personal assets may be subject to risk. In the off chance that you are ever sued or if you file bankruptcy, your assets (home, car, other real estate) can be taken as payment. On the other hand, filing as a corporation or LLC protects your personal side.
Corporations have their own sets of benefits. There are tax deductions you wouldn’t otherwise qualify for, and the corporation acts as its own entity, so you file business taxes rather than reporting its income on your personal taxes. But there are a lot of hoops to jump through. You need a Board of Directors and have to file Board minutes several times a year. Read More