The most important thing to consider when you start your own business is to shield yourself from personal liability. If someone slips and falls in your business or if one of your employees has a car accident while driving the company car, how to do you avoid being personally responsible to the third party?
One way to protect yourself from personal liability is to form a Corporation or a Limited Liability Company. When you hear the word Corporation, you probably think of a large company such as Ford or General Motors. The people who own Ford and General Motors are its shareholders. If a General Motors or Ford customer has a problem with one of its cars, the shareholders are not responsible, the Corporation is. A Corporation is a legal entity that has an existence on its own and is separate and apart from the shareholders who own it. The Corporation can enter into its own contracts, own its own property, and otherwise participate in business affairs. If you own a Corporation, it is the Corporation, not you, that is responsible for the business debts and obligations.
It is extremely important that you talk to your insurance agent about obtaining sufficient insurance to protect you and your business. There are many ways to protect yourself from personal liability when operating a small business.
