With the epidemic rise of business disputes and lawsuits, starting and operating a business is riskier now more than ever.  However, starting a business is still the most effective method for entrepreneurs to pursue their passions and achieve financial independence.

It is universally recognized that any small business owner is better off operating his or her business through a separate legal entity such as a corporation or limited liability company. The added costs are minimal compared to the significant benefits.

·        Limited Liability Protection

·        A Reduced Likelihood of Tax Audit

·        A More Professional Business Image

·        More Privacy

Limited Liability Protection.  In today’s litigious society, your chances of being sued are higher than your chance of being in the hospital. If you start a new business, those chances get even higher.  Any transaction is a potential for a lawsuit and anyone can file a lawsuit for years after the alleged incident.  You greatly minimize this risk and better protect yourself and your family by benefiting from the legal liability shield offered by properly formed and maintained Virginia corporations or LLCs.  Without a legal entity, you will have unlimited personal liability for the debts and obligations of your business.

Reduced Risk of Tax Audit.  You want to minimize any dealings with the Internal Revenue Service as much as you can.  Statistically speaking, sole proprietorships have a much higher chance of being audited than a corporation or limited liability company.  Although you can never eliminate your likelihood of a tax audit, it is worth doing what you can to reduce that likelihood.  If your business is ever subject to an audit, you will spend a lot of money and time that would be better spent running your business.

Professional Image.  Statistics overwhelmingly show that customers prefer to do business with corporations or limited liability companies . . . rather than John Smith’s sole proprietorship business.  Having a legal entity designation after your business name is independent proof that you have engaged in serious business planning and shows that you have made an intelligent investment in launching your business. Legal business entities portray a more professional and serious business.  Customers prefer this and do more business with legal entities.

Privacy.  By using a separate legal entity for your business activities, you and your personal information and involvement will be subjected to more privacy.   

Learn More About Forming a Virginia Limited Liability Company

Learn More about Forming a Virginia Corporation