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Why Incorporate or Form a Limited Liability Company?

April 27, 2012

Incorporation is an important step in the life of a business, but unfortunately the true value of incorporating a business or forming a limited liability company (LLC) is often not realized until the business faces a negative situation, such as a lawsuit or bankruptcy.

A primary advantage of forming a corporation or LLC is the limited liability these entities afford their owners. Typically, owners are not liable for the debts and obligations of the business; thus creditors cannot pursue the personal assets of the owners to pay the business debts. Conversely, in a partnership or sole proprietorship, where the owner and the business are considered legally the same, the owner’s personal assets may be used to pay debts of the business.

Other advantages of forming a corporation include:

· Incorporating may help to establish credibility for a new business with potential customers, employees, vendors, and partners. (more…)