Jump to content

incorporating a business


Recommended Posts

While I cannot help you with the cost, switching to at least an LLC is beneficial in many ways. The main being, if you are sued, your personal property will not be affected. I recommend you contact a real estate attorney.

I doubt that that's true for most one-man shops. They'll sue the corp and the individual.

- Jim Katen, Oregon

Link to comment
Share on other sites

While I cannot help you with the cost, switching to at least an LLC is beneficial in many ways. The main being, if you are sued, your personal property will not be affected. I recommend you contact a real estate attorney.

I doubt that that's true for most one-man shops. They'll sue the corp and the individual.

- Jim Katen, Oregon

Anybody can try to sue you personally, but if you sue a corporation you cannot go after ones personal properties. Therefore, creating a corporation does give you additional layers of protection.

There are also tax benefits to being a corporation. But you would need to speak with an accountant or tax attorney about that.

Link to comment
Share on other sites

Chris,

The question has been asked, and answered, several hundred times in the past years on nearly every board known to mankind. The correct answer is; go to your atty. I have very strong and valid reasons for telling you that.

During the past twenty years I have been involved in causes of action against inspectors that are structured in any number of ways. I suspect I have participated in as many inspector lawsuits as some of you have done inspections. All inspectors are vunerable. Do not listen to other inspectore, even me! Go to an atty.

BTW, I think a corporation can file and operate a DBA in New York. A DBA is not a business model.

Link to comment
Share on other sites

Thanks for all the input. I will contact an attorney, with business picking up I think I do need better protection from being personal sued.

gonna add my 2 cents cdn. I just went thru all this a few weeks ago. Of course your lawyer is the final word, but keep that appointment. He is gonna cost you at least 200. Worth every penny. He is going to listen to you ask him questions for that, be prepared, make a list, make that list, bring that list...after you speak with him make a new list. Take this list to your accountant. Do this soon after the lawyer visit. Tell him what you want to do.

My Business is going to evolve from sole proprietorship to LLC. Tax laws change here in Canada for corporations. For the bettter. In time my plan will work.

Good luck to you

make the list

Link to comment
Share on other sites

This is just me being curious.........

Is anyone aware of any single individual corporation or LLC (most HI business'es) actually have their personal assets protected by the corporation?

When I was going through all this, a dozen or so attorneys all had the same explanation for why a corporation or LLC won't protect an individual (operating as a corporation) providing professional services. It's why doctors, architects, and consultants have E&O/malpractice insurance. A large inspection firm might get protection for the owner, but only a large firm with several employees.

There's some underlying English Common Law principle that doesn't protect an individual operating as a corporation. I forget what it is.

Anyone know? (yeah, call an attorney, I know....) I was just curious if anyone has had a similar experience.

Point being, if the only reason you're incorporating is because you imagine the 1 person corporation will protect your personal assets, think again.

Link to comment
Share on other sites

Anybody can try to sue you personally, but if you sue a corporation you cannot go after ones personal properties. Therefore, creating a corporation does give you additional layers of protection.

There are also tax benefits to being a corporation. But you would need to speak with an accountant or tax attorney about that.

Let's get one thing straight. A corp has many benefits. But the corporate veil is transparent in many cases. It is not a place to hide from a suit. If you do not have proper meetings of officers, notices, minutes of the meetings, all stamped with the corp stamp and in a proper binder, your ass is grass. If your financial statements do not reflect a proper corporate structure, if the court deems that you take too much out of the corp, if an attorney sees any small crack in your structure, you will get sued.

In addition, as stated above, anyone can sue anyone for anything. Whether it gets to a jury or not is up to your insurance company.

On the other hand, if you run it properly it can be beneficial in deterring actions. But not stopping them.

Link to comment
Share on other sites

Here's my experience with a NY 'S' corporation:

1. The corp. filing differentiated business assets from the principal's assets. My business was a partnership, and in the event of an action or judgement the business assets/insurance would be exhausted first with any shortfall being devided among the principals based on the number of shares held.

2. A Corporation is an individual entity and as such is subject to tax, then you draw a salary and pay tax on those dollars again. Subchapter 'S' eliminates the Corporate tax and distributes that liability to the principals based on the number of shares held, so if the business makes (or looses) money it gets taxed on your personal return. An 'S' corp has tax advantages, a corporation does not-at least not at the kind of dollars we're talking about.

3. Corporate Officers are not eligable for Unemployment benefits in NY despite having to pay for those benefits, some one has to be available to manage the corporate operations. More importantly, you can exempt yourself from Worker's Compensation ('S' Corp only) or pay in at office staff rates. Either way when you fall off a roof you effectively have no benefits. Corporate officers have no business going into the dangerous places HIs go (or contractors when I did it).

4. You can file all the paper work your self. I did, but I had the guidance of a personal friend that was clerking at a very large corporate law firm while preparing for the bar exam. You should really talk to your lawyer and your accountant before you make any decisions.

5. I disolved my 'S' corp almost a decade ago, and I still get hounded by collection agency attempting to collect an even older cell phone bill that was disputed by the business. If they can pierce the "corporate veil" for a phone bill and over ten years of interest that amounts to $150, how much protection do you really have? The cost and the paperwork don't provide enough distance between business and personal assets to be worth the bother in my book. Your mileage may vary.

Tom

Link to comment
Share on other sites

I disolved my 'S' corp almost a decade ago, and I still get hounded by collection agency attempting to collect an even older cell phone bill that was disputed by the business. If they can pierce the "corporate veil" for a phone bill and over ten years of interest that amounts to $150, how much protection do you really have?

This might be of some interest to you,Tom. http://www.bankrate.com/brm/news/cc/200 ... sp?caret=8

Link to comment
Share on other sites

Thanks Gary, but I am very familiar with collection laws. I did a brief stint as a collector once, and that partership I was talking about was with a long time collector. If memory serves, the original dispute was over something like $20. The cheapest way out is to just continue to ignore the collection attempts, which is exactly what I intend to do, if I was right then I must still be right. If I have my lawyer call these yahoos it'll cost me about three times what they want to collect.

Tom

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...