For my first blog post, let’s start with the first thing that every business owner should consider – setting up a business entity when you start a new company.
What do I mean by “a business entity”? I mean setting up a corporation or a limited liability company (“LLC”) as the formal structure of your business.
Why do you do that? To protect your personal assets from any bad fortune that may strike your business.
Let me give you some examples: If someone slips and falls in your store, or if you happen to serve up some food in your restaurant that makes people sick, or if your biggest customer’s purchase order doesn’t come through when you expect it. Any of these unexpected events can cost your business money; perhaps more than you can afford.
That’s where having a business entity (and liability insurance) comes in. As long as your treat your business as a separate “thing”, meaning that you don’t use the business bank account or credit card to pay for your personal expenses, and you keep proper books and records, then the government and the courts will treat your business as something separate and apart from your personal finances.
That way, if bad luck strikes, you won’t lose your home, your savings, or your retirement account to pay a judgment against your business. You can preserve the assets you have built up for retirement, secure in the knowledge that your business risk is properly planned for and contained.
Going to the County Clerk’s Office to obtain a D/B/A Certificate is not the same thing as setting up a business entity. A D/B/A Certificate will allow you to open up a bank account in the name of your business, but don’t be mistaken; you are still the person who is personally responsible for any debts of your business. That includes all of your personal assets, if you have to satisfy a judgment against your business.
If you need help setting up a new corporation or limited liability company, please give me a call at (315) 877-1741 and I’ll be happy to help. Get your business off on the right foot. Set up a business entity!