This is a question that I hear frequently from many entrepreneurs and business owners. No matter what stage in your business the answer is the same … RIGHT NOW!
The potential damages from the failure to incorporate can be incredibly damaging to your business, your family, and your future. Let’s take a look at just one example of a failure to incorporate.
John owns a small business. He runs an internet based business where he generates leads for his clients and then sells them the leads. John runs his entire business from his home. There is one and only employee and his name is John. He got his business up and running so quickly that John failed didn’t go through any of the proper formalities to become incorporated properly.
One day while John is working on generating more leads for one of his clients, he sets up a web page and uses a picture that he thought he had permission to use. Unfortunately, John made a mistake. The image he was using was subject to copyright protection. A few weeks later John receives a letter in the mail demanding that he take down the image and send them a check for $30,000.
John visits a lawyer and he learns that he has no case. The artist of the image had a registered copyright and was entitled to receive statutory damages by just proving that John used the image without permission.
What made matters worse was that John was operating his business as a sole proprietor. This means that all of John’s personal assets were at risk. This included his home, his savings, and his retirement. John had no choice but to settle the matter and write a check for $30,000 from his savings account.
If, however, John had been incorporated properly, whether that was a corporation or a limited liability company, John’s personal assets would not have been at risk to loss. In fact, the only assets that would have been at risk would have been the assets of the business.
As you can see, failing to incorporate your business in the beginning, can cost you tens of thousands of dollars in the future.
If you are an entrepreneur and a business owner, please call your Nashville Tennessee Business Law Attorney today to discuss your legal issue.
Give us a call at (615) 472-2482 or Click Here to Schedule a time to discuss your business or corporate law legal issue.