Starting a business is a big step for anyone to take, as it may require leaving the comfort and security of a regular job for a more uncertain financial future. Business success may also require a great deal of planning, enough initial capital to sustain the owner during the start-up period and possibly a bit of luck.
Corporations and LLCs offer greater asset protection than sole proprietorships and general partnerships, which is a strong reason for incorporating a business. A sole proprietor or general partner has unlimited personal liability for the debts and obligations of the business. In other words, their personal assets (like their home, car, and personal savings) remain at risk in a judgement against the business.
In contrast, corporations and LLCs allow owners to separate and protect their personal assets from the debts and obligations of the business. In a properly formed and structured corporation or LLC, a judgement against the business should not affect an owner’s home, car, savings, or other personal assets. CBA Direct is here to assist!