At tax time, many lawyers or accountants are asked by self-employed people, whether they should incorporate or form some type of business entity.
The reason many people form business corporations or business entities is that they wish to keep their business assets and personal assets separate. There are several business ownership options, such as a corporation, S corporation, LLC, LLP, PA. Partnership.
If you do form a corporation or other business entity, there are some simple rules you should follow, so that the entity does not go away without your knowledge.
1. Keep all money in a separate bank account.
2. Pay your bills and staff from the business account only.
3. Make sure you take out insurance in the name of the business. You may need
to include yourself personally, that is a question for a risk manager.
4. Do you need workers compensation coverage? For you? For your staff? This
can be real problem for construction related entities.
5. What about auto insurance? Is your business covered when your assistant
takes the mail to the post office in her/his own car?
These are only some of the issues that arise when forming or owning a business. Next week we will list more of the issues. The issue or concerns related to owning a business are not new issues. But they are concerns you should take into consideration before you fill out the entity paperwork and send your money into the State.