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When I set up my glass studio as a business one of the things I was most concerned about was the shear liability of selling something made of glass. Given the litegious nature of our society these days and the shear number of ambulence chasing lawyers out there, I was, and still am concerned about the customer that breaks something and then cuts themselves and then looks to me and my business and wants to win the lottery.

I did do a fair amount of local research on the topic, talking to both lawyers and accountants. Bottom line I was given was that from a business perspective the personal protection of a corporation really did not exist much any more. From this I mean that a lot of people were incorporating, going and getting business loans and then defaulting the business and basically stealing the money and using the incorporation as a shelter. Corporation/Personal bariers have been (rightly I might add) broken to stop this practice. I was also advised however that from a liability standpoint the barrier between corporation and personal is still quite good and because of this incorporating my business would give me a greater protection from liability verses using a sole propri. or LLC.

Now that I'm going through my first year of paperwork and taxes as a corporation....I'm really wondering if all this work is really worth the protection.

Any other opinions out there or experience?

Phil

Phil Hoppes wrote:When I set up my glass studio as a business one of the things I was most concerned about was the shear liability of selling something made of glass. Given the litegious nature of our society these days and the shear number of ambulence chasing lawyers out there, I was, and still am concerned about the customer that breaks something and then cuts themselves and then looks to me and my business and wants to win the lottery.

I did do a fair amount of local research on the topic, talking to both lawyers and accountants. Bottom line I was given was that from a business perspective the personal protection of a corporation really did not exist much any more. From this I mean that a lot of people were incorporating, going and getting business loans and then defaulting the business and basically stealing the money and using the incorporation as a shelter. Corporation/Personal bariers have been (rightly I might add) broken to stop this practice. I was also advised however that from a liability standpoint the barrier between corporation and personal is still quite good and because of this incorporating my business would give me a greater protection from liability verses using a sole propri. or LLC.

Now that I'm going through my first year of paperwork and taxes as a corporation....I'm really wondering if all this work is really worth the protection.

Any other opinions out there or experience?

Phil

Phil

I am a sole proprieter. I carry 2,000,000 worth of liability insurance. My assets don't go far beyond my house. So sue me.

Phil Hoppes wrote: Now that I'm going through my first year of paperwork and taxes as a corporation....I'm really wondering if all this work is really worth the protection.

What kind of corporation -- "S" or "C"?

I'm set up as an "S" -- the paperwork is minimal and my accountant charges me less than $200 a year to do it all. (I keep good records during the year and just hand an Excel spreadsheet over at year end.)

"C" corporations are much more expensive and difficult, and don't offer any additional protection for all the hassle.

I vote for S Corp., too.... however, I'm doing research on LLCs as I think they offer some advantages over the S Corp. No matter how little you think you have, the protective benefits of an incorporation in this day and age cannot be overlooked. I have had experiences in the last year.... and gained information and knowledge... that make me reluctant to have anything in my name. It's not enough to be honest, honorable, and straighforward in your business dealings. Protect yourself legally, even if you think your life is insignificant in the big picture.

Cheers,

Dani

Phil Hoppes wrote:When I set up my glass studio as a business one of the things I was most concerned about was the shear liability of selling something made of glass. Given the litegious nature of our society these days and the shear number of ambulence chasing lawyers out there, I was, and still am concerned about the customer that breaks something and then cuts themselves and then looks to me and my business and wants to win the lottery.

I did do a fair amount of local research on the topic, talking to both lawyers and accountants. Bottom line I was given was that from a business perspective the personal protection of a corporation really did not exist much any more. From this I mean that a lot of people were incorporating, going and getting business loans and then defaulting the business and basically stealing the money and using the incorporation as a shelter. Corporation/Personal bariers have been (rightly I might add) broken to stop this practice. I was also advised however that from a liability standpoint the barrier between corporation and personal is still quite good and because of this incorporating my business would give me a greater protection from liability verses using a sole propri. or LLC.

Now that I'm going through my first year of paperwork and taxes as a corporation....I'm really wondering if all this work is really worth the protection.

Any other opinions out there or experience?

Phil

My wife and I just had this conversation with our lawyer.

The degree to which protection under and LLC differs from an S-corp varies from state to state, largely as a factor of how much established case law there is.

The degree to which the either provides protection is largely driven by how you run the business. If, for example, you use your corporate checking account like a personal account, then you are likely to see little protection.

Follow the rules, keep the records and run it like a truly independent entity from yourself and you are better insulated than with a sole proprietor or partnership.

- Paul

You cannot use a corporate checking account as a personal one. That is "breaking the corporate veil" and essentially negates the corporation. If you are a sole proprietorship, you should also keep your business and personal checks separate. Take a "draw" check on a regular basis from your company account, then put that money in a separate checking account or use cash. You'll be hard-pressed in an audit proving business expenses even if you save your receipts if you mix up personal and biz expenses, especially on the same purchases. It ain't like the old days.... even then, the burden of proof was a challenge during an IRS audit if your records weren't pristine.

Been there in work and play more than once,

Dani

I've set myself up as an S corp. Hey, I use to be an engineer so anal doesn't even begin to describe how I keep records and I just set up a company checking account and I'll be very careful to keep personal and business separate.

For this year I had to refile with the IRS as they granted me S corp status for 2003 and on but neglected to give me S corp status for 2002. I made zilch last year but still the paperwork is a major hassle so working with my accountant I'm changing it back.

Now that my kids are out on their own I should be able to get a blanket liability again. (Anyone who has had kids and they drove your cars.....I don't need to go any further. )

Phil