Which one is better?

When it comes to protecting personal assets, most business owners will just incorporate. However, I wonder if this is really the best option. Incorporating is expensive ($350 payable to government, ~$500 for articles of incorporation), they are complex and require the help of lawyers, and they are taxed twice. the biggest benefit of a corporation is its ability of raising large amounts of free capital within a small timeframe. Benefit, which most small business owners never take advantage of because they are not publicly traded. At least you ony have to pay once.

So how about the two other options? How about limited partnerships? A business owner could find someone to become a general partner. But then, he would probably have to give up a large percentage of income and control.

But how about liability insurance? Anyone knows about how much it cost and the usual terms that come with those contracts?

If you need the advice, look into LLCs. No double taxation (it's taxed as a partnership), "corporate-style" limited liability for everyone (an L.P. need s to have at least one general partner who is on the hook).

Also, you really don't need a lawyer to form a corporation...just go to the Delaware Division of Corporations, download the forms,mail them in, and voila. The main reason to use lawyers is for tax structuring purposes depending on how you intend to use the corporation.

As for which is best, an LLC or corporation is cheaper than a general liability or commercial liability insurance policy, so long as you don't have a huge number of shares (as the more shares outstanding the greater the annual franchise tax you have to pay). It only costs $89 to form a corporation in Delaware if you do it yourself ($90 for an LLC), plus mailing costs, plus a little extra if you want the process "expedited" or you want to get certified copies back from them, rather than a plain old photocopy.

That said, there is always a chance that a court can "look through" the limited liability (called "veil piercing") if you don't keep adequate assets in it, fail to treat it as a separate entity or do other things that the court thinks warrants the piercing of the corporate veil, though that's rare. That being said, there are plenty of ways your insurance company can try to screw you out of coverage too...probably more ways.

Also, most businesses have assets that you wouldn't *want* to lose just because of a single bad lawsuit...so even after you have your limited liability set up, insurance is usually a good idea.

If you need the legal advice, look into LLCs. No double taxation, limited liability for everyone (an L.P. need s to have at least one general partner who is on the hook).
As far as I know only professionals can create LLCs....
(Professionals meaning dentists, lawyers, accountants...)

Also, you really don't need a lawyer to form a corporation...just go to the Delaware Division of Corporations, download the forms,mail them in, and voila. The main reason to use lawyers is for tax structuring purposes depending on how you intend to use the corporation.
How about the articles of incorporation?

As for which is best, an LLC or corporation is cheaper than a general liability or commercial liability insurance policy, so long as you don't have a huge number of shares (as the more shares outstanding the greater the annual franchise tax you have to pay). It only costs $89 to form a corporation in Delaware if you do it yourself ($90 for an LLC), plus mailing costs, plus a little extra if you want the process "expedited" or you want to get certified copies back from them, rather than a plain old photocopy.
You seem to live in a great place. Here, it costs $350 to register a corporation (and that doesn't cover the costs of searching the name in a registry and then registering the name!).

That said, there is always a chance that a court can "look through" the limited liability (called "veil piercing") if you don't keep adequate assets in it, fail to treat it as a separate entity or do other things that the court thinks warrants the piercing of the corporate veil, though that's rare. That being said, there are plenty of ways your insurance company can try to screw you out of coverage too...probably more ways.
True. I suppose liability insurance is out of question...


Thank you for reminding me that I can create a LLC! I still need a solution for my clients as well... :shrug:

Huumm.... :scratchin:

Which one is better?

You claim to be an accountant, yet you don't know? What if you're clients asked about this ....would you say, "Oh, just a moment while I post that queston on sciforums."?

Baron Max

You claim to be an accountant, yet you don't know? What if you're clients asked about this ....would you say, "Oh, just a moment while I post that queston on sciforums."?

Baron Max
Every great thinker in the history of mankind always looked for a second opinion. Sadly, sciforums is not a place with only bright minds. It also has useless minds that ask useless questions.

Btw, structuring a business is a legal matter, not an accounting matter. Asking an accountant to advise you on legal matter is, well... no offense, but plain stupid! :rolleyes:

I rather hear from a second opinion that is more aware of legal matters. In other words - NOT YOU!

I also want to steer up some intelligent discussion on sciforums. Something that doesn't happen very often, thanks to some... people.... :rolleyes: