For many small business owners the major drawback of setting up an entity is of course the cost.
It’s true that there are some costs, for example formation costs, these are minimal but you may not regard them as minimal if your budget is small.
Some businesses aren’t real businesses, as they are operated out of somebody’s house and they’re operating more of a hobby than a business.
For those people, forming an entity may not be feasible because of the costs involved. Even though the costs aren’t particularly extensive, if you’re starting up a home business and your gross revenue for the first year is forecast at only $20,000, unless it’s a risky business it probably doesn’t make sense for you to form an entity.
But if you have a genuine successful business, and you’re actually making money operating as a sole proprietorship or partnership, you should think about forming an asset protection entity, something that will protect your personal assets, such as a corporation or a limited liability company.
Don’t Need Small Business Law Help?
We always tell people that if there is no budget to form an entity, at least form one of these $69.99 entities online and conduct your business through that until you can afford to go down the more formal route.
You will probably make mistakes and perhaps you’ll even need to start over further down the road. But in the meantime at least you have the argument that you have an entity should you ever need it. This argument can probably be pierced, but at least you will have raised the argument.
But if you have a real business and you have the budget for it, you really need to form an entity in order to operate correctly.
How to Fix a Small Business Law Mistake
Sometimes we get new clients who set up their corporation or LLC by themselves or with another (less experienced) attorney and we have to clean up the mess.
It happens all the time.
They found a form on the internet and filled it in.
We almost always have to simply scrap it and start over.
Typically we have to go back and amend the articles of incorporation or the articles of organization.
So if you have a real business and you have the budget for it we commend that you source an experienced small business law firm that can help you set up the correct entity that will protect yourself from liability.
How to Hire an Experienced Small Business Law Firm
Does your business need an experienced small business law firm? If so then your are in the right place.
Tags: small business law