In a sole proprietorship, you are the business, and the business is you. The main drawback of this arrangement is that you could end up personally liable when something goes wrong with the business. Companies benefit from a corporate veil. If you have a limited liability corporation, the extent of your liability is the business assets. If you have debts or you are facing a lawsuit, people cannot go after you personally unless certain exceptions apply. In a sole proprietorship, you end up with unlimited personal liability. If your business fails or you commit a tort, you will be personally sued. It is better to incorporate it in some form to protect yourself.
There are also business continuity risks in a sole proprietorship because the scope and extent of the business are you. If something happens to you, the business may not survive. If your hope was for business succession, a sole proprietorship is not the best business form because there is no legal entity to continue.
In addition, you may have tax issues that could cause you to pay higher rates in a sole proprietorship. There are certain tax benefits and laws that can benefit corporations, but they do not benefit business owners personally.
Before you launch your business, you should consult with an experienced corporate attorney to learn about each corporate form and how it may benefit your business. You should also consider the risks of each corporate form in order to make sure that you are personally protected. This decision is not one that should be quickly made.
Contact an Atlanta Corporate Law Attorney Today
Battleson Law LLC can help your business do its due diligence when you are choosing a corporate form and preparing the necessary paperwork. To speak with an experienced lawyer, call us today at 470.766.0811 or send us a message online.