Say the word “corporation” to the average person and they’ll probably make the association of a substantial business: office buildings, boardrooms, stock deals, factories, an army of employees, and so on. In making that association it may never occur to someone who owns a business, no matter how small, whether already up and running or still in the planning stages, why they should have a business structure not all that different from what they pictured as the “big” company. That business structure or entity might take the form of a Limited Liability Company (LLC), a close corporation, or a non-profit corporation.
Almost any form of business enterprise you can imagine, from a corner deli to a plumbing and heating business to a business consultant to a one-truck trucking company, can benefit from forming one of those business entities. But wait, you say, my business is small or just in the embryonic stage. I’ve got a lot of expenses and I can’t afford the time or the costs of forming a business entity.
There are two answers to that objection. First, you can call us at Harvard Business Services, Inc. or go to our web site at http://www.delawareinc.com and have a business entity well on its way to being formed in a matter of minutes. As to the cost, if you consider that even our premium service, which you may or may not need, costs less than a new desktop computer, the fact is you really can’t afford not to form a business entity. Here’s why.
If you run a business, you can be sued. As this article was being written a family-owned drycleaner in Washington D.C. was being sued for upwards of $50 million because they lost the pair of pants to a customer’s suit. That’s an extreme example but it makes the point. If a customer slips on the floor in your store, if your truck backs over someone’s prized petunias, if your HVAC installation causes a short and damages someone’s home, you can be sued. And in today’s environment there’s a good chance you will be.
But wait, you say, I’ve got liability insurance. That will pay for any damages if I lose a lawsuit. Really? Do you imagine the dry cleaner in Washington D.C. had $50 million worth of liability insurance? Do you think the attorneys representing the people suing you will be satisfied with the limits of your liability insurance? If you haven’t formed a business entity you are liable