A corporation is a legal entity separate from its owners. Its transactions are separate from its owners, its assets are separate from its owners, its liabilities are separate from its owners, and so on. In a nutshell the crucial component here is that you are not the corporation and the corporation is not you.
If you are the owner of a sole proprietorship or if you are involved in a business partnership, there is essentially nothing that separates you from your business. This means that all assets owned by the business are also associated with you, but so are the liabilities.
If you own a sole proprietorship or are a partner in a business, you are personally responsible for any liabilities that the business may incur. With a partnership, even if you are not the partner who incurred the liability, you are still personally responsible in the event that the other partner(s) is not able to pay.
In effect, a Corporation acts as a barrier between its business owners and creditors. If your sole proprietorship or partnership is sued, it is the same as being sued personally. If your Corporation is sued, you have no part in the suit because the Corporation is a separate entity from you. Your personal assets, including your home, retirement savings, cars, children’s education funds, etc., are safe. There is no better way to protect your life's work than to incorporate your business.
In addition to asset protection, incorporating will provide:
Talk to us about our Nevada Corporation packages or learn more about other entities such as Nevada LLCs.