You’ve got a great business idea, created a killer business plan, and you are finally ready to move forward into a dream of your lifetime: owning your own business. Next step, choosing which type of entity will suit your business best – and it’s down to Inc. vs. LLC.
You may think this is a no-brainer. Doesn’t everyone say an LLC is always better? That doesn’t mean it’s always true.
Inc. Vs. LLC: Which Is Best For Your Business?
LLCs have their place. They can certainly be a very useful and appropriate entity, such as for real estate companies. For most other types of business, though, Inc. is generally the preferred entity. Here’s why:
Established: Inc. has been around for a very long time, courts all over the country are familiar with and in agreement about most aspects of the entity. You know where you stand from the beginning.
Liability: Although liability is addressed right in the name of an LLC, that doesn’t mean it’s foolproof. Nothing beats an Inc. for maintaining the impenetrability of the corporate veil and limiting liability of the owners.
If you are trying to choose between Inc. or LLC, consider your type of business. Retail, goods and services, construction, and most other types of businesses are much better served by incorporating instead of choosing an LLC.
Creating an Inc. or LLC.
You’ve made your decision regarding Inc. vs. LLC, now it’s time to create the entity. Remember, this is the foundation upon which your business stands. It is of utmost importance to do it correctly.
Do your due diligence. Speak to someone who really knows what they're talking about, which is probably not your brother-in-law, next door neighbor, or someone who read something online.
Similarly, using an online service to set one up whichever entity you choose is not in your best interests. Don't just create something out of nowhere and think you're good to go, because that is not going to work.
Always, always, go to a lawyer and accountant for advice. You should have both, and all of you should be on the same page. Don't try to play games with all kinds of asset protection schemes, just do what you're supposed to do, and don't do the wrong thing.
For instance, corporations should be impenetrable from liability, but you have to do it correctly. Make sure you have a corporation book, meetings, take minutes.
Starting your own business is one of the most important actions anyone can take in their lifetime. You have the opportunity to change, not only the course of your own life and that of your family, but possibly the lives of generations to come. Don’t risk that dream by starting off on the wrong foot.
We Can Help You With Inc. Or LLC
We handle these kinds of business concerns every day. If you’re thinking about starting a business, send us an e-mail and let’s talk!
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The Hartley Law Group
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Chesapeake, VA 23322
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