Why be incorporated?

In considering the issues for starting a business, which is to sell pet treadmills in affluent areas, the large inheritance to start the business, and the needed legal protection for the rest of the inheritance, the consensus would be to form an S corporation. Since the corporation is a separate entity from the owner, the rest of the large inheritance would be legally protected or shielded from lawsuits of the corporation. As a corporation, there would also be substantial advantages, investment opportunities, and savings available to an incorporated business. As well, to fund the start of the business, capital can be raised through selling stock to a couple of rich friends.

Liabilities of Corporation

Corporations provide limited liability protection to the owners known as shareholders. Members of Corporation have limited liability for the obligations of the corporation, which include not held liable for company debts and liabilities. Owners have financial liability protection. Each member has no individual liability to the company’s contracts unless they signed the contract in a personal capacity. The problem is, most lending institutions require personal guarantees to obtain credit for new companies. Though a removal or personal financial liability exists, each member remains liable for any torts that he or she commits while acting on behalf of the company.

Advantages and Disadvantages of Hiring Employees

The company’s intention is to use traditional marketing and sales methods in addition to the ecommerce functions to generate sales. The advantage to hiring employees is having a dedicated workforce. The company has more control over the time of each employee as opposed to working with independent contractors. Allocating and distributing work between employees will remain the responsibility of management within the company. Another benefit to hiring employees is the loyalty employees will provide. Employees often take more pride in the...