James C
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Incorporation is very important. It creates a seperate entity than yourself in the eyes of the law.
Why do this, why incorporate?
If someone sues your company, they are doing just that, suing your company and NOT you. Your business my lose all its money, but you won't lose your personal assets.
If the business fails: Let's say you owe your vendors millions of dollars and can't pay it. Well, your corporation will go bankrupt - but not you. Can't touch your personal assets.
Often times builders of, let's say, a condo building will create a serperate corporation for EACH project. They do this because if the project fails, only this project fails and not the rest of the organization.
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Rick C
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The short answer is:
Setting up a business as a separate legal entity(Corporation) protects the owners of the businesses personal assets from liens or lawsuits.
This means if the business is sued, goes bankrupt, or held responsible for a large payment of some kind the owners of the businesses assets will be protected and they will not be personally responsible for the corporations problems. (house,car, savings).
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Leasa
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It is about liability and how the individual owner's assets are fair game for business debts if the business is not a seperate legal entity.
Also, in terms of filing taxes, the business entity keeps the profits, losses, and assets seperate from the individual's. |
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virtualyfunny
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In your business class, you should have learned the different types of small business: Individual Proprietorship, Partnership, LLC and Corporation. Know the difference among those types, i.e. especially Individual Proprietorship vs. the others. Individual Proprietorship does not separate the business owner from the business and would therefore be personally liable for any legal actions against the business. Knowing the differences, you could easily explain or answer this simple question. |
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cuteredhead
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why is it important to incorporate your small business? what kind of protection do you (personally) get from it. |
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David A
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I think you are on the right track. Establishing an LLC protects the business owners PERSONAL assets. |
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Unhip White Guy
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This is called incorporating. This is done so the liabilities and debts of a business are restricted to the business. The corporation is a separate entity which limits the liability of the business owner from frivolous lawsuits and debt collection. |
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MamaB25
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It's asking you why you should not use your name for the business, i.e. a sole proprietorship. Instead, you should establish a corporation so that if someone had a lawsuit out, they could go after your business and not your personal assets.
I hope this helps you ;)
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heather g
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Yes -
The reason to establish a separate legal entity shields the owner's personal assets from any legal claims/litigation against owner or employees for acts committed during the normal course of business.
There are exceptions - if acts constitute fraud, and the owner intentionally used the business entity in an attempt to conceal or commit the fraud, then the court can set aside the entity as a sham/(alter ego ("pierce the corporate veil") and expose the owner to personal liability for acts committed by or on behalf of the entity.
Tax and estate planning are also good reasons for establishing a business entity. |
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rsriram_1999
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Dba is really not a separate legal entity. Creation of a pc of some form
has various advantages.
limited liability
corporate status
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Brenda
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They are talking about a C corporation. |
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satria a
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If you want it you will get it.I advice you find people who experience in business studies and may be more question and answer you can get it.Instead of you just keep quiet and never mixed around with them.You will not understand it. |
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Laura
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You are right, it IS talking about LLCs, as well as corporations. These are separate legal entities. It's basically wanting the benefits of your company being a separate legal entity. The biggest importance of having your business be a separate legal entity is that it separates liability. A corporation or LLC has to file it's own taxes and if it loses money, it can't effect the assets of the shareholders, past what has been already invested.
Hopefully this will clear up the question for you a little so you can formulate the full answer. Good luck. |
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Larry
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Sure. A business can be in the form of a sole proprietorship, a partnership, or some form of corporation. A sole proprietorship is not a separate legal entity from the owner. For tax and liability purposes, whatever happens to the business is the responsibility of the owner.
If the business is a separate legal entity, the owner(s) are not legally responsible for the liabilities of the company (unless they agreed to that in a contract - a loan might require this). So for example, if the company gets sued or goes bankrupt, the owners' assets are protected.
Larry (CPA) |
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babiarz100
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It is super important to separate business from the individual owner as far as limited liabilities go.
What this entails is anything to do with bankruptcy, damage or being sued etc....
By doing this it creates two separated identities. If something goes wrong with the business (like being sued), than only the business is being held accountable and not the owner. They can't go after the owner if the business doesn't have enough money to cover the costs.
Its a great way for business owners to protect themselves.
There could be more reasons behind that, but I don't know |
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skaizun
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If you don't understand it, then it's not a "simple" question, is it?
As such, you need to discuss this with your parents or, better still, your teacher, or else you'll end up having a similar question on a test, and you won't be able to answer that one, either!
More importantly, you missed the part where it says,
"In YOUR own words".
P.S. BTW, did you notice how I didn't say,
"It looks like 'B.S.' to me"!
I'll bet you never thought of that! ;) |
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sathishpurella
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Getting permission from local authority and registration with sales tax authorities. Some times it require to register with local union and communities for better accomidations. |
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