Why become a corporation -

[pattigril]

My business is currently not a corporation, but I am thinking about changing that but I need some insight on the reasons I would want to change my filing status.

[Happy]

Our biggest reason to incorporate was to protect our personal assets from being taken. If you are sued and unincorporated you could lose everything. Another big issue is product liability. Let's say one of your products hurt someone and or a customer is not satisfied with your service they might try to sue you. After the McDonald's lawsuit over hot coffee I saw the light about frivolous lawsuits. People are sue happy and don't mind taking everything you worked so hard to get.

 

A friend of mine was a Corporate Gift Consultant. She taught everything I know about being a Corporate Gift Consultant. She sent someone a gift basket that had some expired food product in it. It clearly was her fault because she got busy and wasn't rotating her inventory. She ended up losing her business and her house. She had to declare BK personally and in her business. If she had incorporated her personal assets could been protected. She also should of had liability insurance.

 

I know here in CA corp tax is $800 plus and we have gottten quotes for liability insurance low as $400.00 a year for a $2 million dollar policy. To me it's like playing with fire. You will get burned one day.

 

Getting off my soapbox

[pattigril]

We are in the electical business and we have to be bonded for at least $7500.00 to have a vailed contractors lincense and you have to have general liability insurance - which we have 2 million costing us $1600 a year.

 

 

So once again I ask the question what are the pros and cons between be listed as a corp. vs not? Also looking for tax reasons.

[javaowl]

We are in the electical business and we have to be bonded for at least $7500.00 to have a vailed contractors lincense and you have to have general liability insurance - which we have 2 million costing us $1600 a year.  

 

So once again I ask the question what are the pros and cons between be listed as a corp. vs not?  Also looking for tax reasons.

 

IMO, your question should be answered by your attorney and/or CPA/Accountant depending upon your specific circumstances and then you and your partner could make that decision based on that solid information. I don't think someone could off the cuff tell you whether you should or not and give you the whys, pros and cons without being familiar with your business and its goals.

 

If you are considering incorporating, here's a place to start reading:

http://www.startupjournal.com/partners/inc...ncorporate.html

(Scroll down to "Learn About Incorporating" and click on "FAQs" of incorporation)

[8004me]

Before I incorporated I discussed it with my attorney.

You can still do the leg work yourself to save on the fees but the 2 hours I spent with him on structure, Inc or LLC was well worth it.

 

Good Luck