Why Incorporate or Form an LLC?

The fact is that we live in a lawsuit filed world. Your odds of getting hit by a devastating lawsuit in the next year are one in four. If you earn over $50,000, the odds are one in two. Over 90 million lawsuits are filed each year. Unfortunately, you can operate your life and business, squeaky clean, and still get sued. Even worse, you can be 100% right, have followed the rules and still lose! How can that be? You can fight the lawsuit for months, pay legal fees and win the case (by it being dropped).

Overall, was that a win or a loss? It depends how you look at it. If you consider all your time you spend preparing and worrying about the case plus your legal fees that you will probably not recover, this may be extremely costly. It is like one person who said, "we fought the case and only had to pay out $15,0000 in a judgement instead of the original $1,000,000 to the plaintiff’s. But we paid out $315,000 in legal fees to defend ourselves! The only one that wins in a lawsuit is the attorney.

What about insurance? Will your insurance cover all the above? Many times it will cover everything except your time and effort to help in the case. Unfortunately, the bigger the case, the more closely the insurance companies will scrutinize the lawsuit and be less likely to pay out large fees to defend you.

What is your next line of defense if that happens? If you are a sole proprietorship, then the judgement will stick against you personally. This can be very damaging and paralyze your ability to financially do much of anything in the future. You may find your bank account subject to the judgement, perhaps your income…You may lose your personal and valuable assets that you have accumulated over the years.

This all stems from the basic belief that the actions against sole proprietorships are easy. A simple fact for most areas in life, in order to obtain a higher level of results, more effort is required. Anytime you hear, the easy way to run your business, the easy way to lose weight, the easy way to grow hair… you know you are running into a short cut that will not produce long term results.

This is why when you start a business, having an added layer of protection by use of an entity like an LLC or Corporation will make sense considering the odds you are up against. It is one thing to subject your investment in a new company to risk, but it is quite another to subject your personal assets to the same level of risk. It is just not necessary for you and your family to be this position.

Incorporate Now

We feel the first step in your new business is a critical one. Which entity is best for you? Please call us at (888) 466-7566, and ask for a free consultation with a Senior Consultant.

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