I hear people ask this question, why should I form an entity? There are significant advantages to forming an entity. When you form an entity or corporation, you are building a wall between you and your business. There are many current business owners operating as sole proprietors, essentially putting everything they personally own at risk. Many times, sole proprietors think that because they have a tax identification number and a business license, they have nothing to worry about if they take them to court. Not having a solid wall in place to act as a shield for your personal life will certainly burn you out every time something happens. If you have an Entity set up and it has been configured correctly, you have nothing to worry about personally. Let’s explain more about that.
If you plan to establish your entity in your home state, which is where you live, you need to make sure you do a few things. Set up your entity with your Secretary of State office. Talk to your local experts about which entity to set up for your business. You can set up an LLC or S-Corp to act as flow-through entities for your taxes. Once you have established your structure, obtain your EIN number, business license if required, state license if required. Be sure again to check with your local business organizations to see what license is required for your business in your county.
Many people have heard the story of locating their Entity in Delaware or Nevada for “better” protection. There are several Fortune 500 companies that established their entity in Delaware due to the establishment of the Business Court there. If you live in Utah and your entity was formed in Delaware, you should take additional steps to protect yourself. You must file your foreign entity from Delaware to Utah using the proper forms provided by your secretary(s) of state’s offices to meet all requirements. If your entity does not file properly from your state of incorporation to your current state of residence, you will not have protection under your corporate veil.
Regardless of the roads you travel, make sure your protection is in place. Don’t risk your family life and all the hard things you worked for. Make sure you put up the proper walls so that when something happens, you are protected. It is important to know which paths to take when setting up your entity, always seek expert advice. Don’t do it alone. There are many people who think they know, but when you ask the right questions, you quickly realize that things are not always what they seem to be.
Cheers-
