Business formation types that limit personal liability
While there are many considerations that go into launching a small business in North Carolina, one of the most important and significant involves the type of business structure you use to create from the outset. At BA Folk, we recognize that many of today’s entrepreneurs and small business owners have concerns about potentially exposing their personal assets to liability, and we are well-versed in the types of business structures that may help you alleviate these fears.
Per QuickBooks, while all business types offer benefits and drawbacks, two particular business structures may suit your needs especially well if you have concerns about personal liability. One of these business types is the limited liability company, and the other, the S corporation. While both reduce personal liability, they do have some notable differences, so you should not select one based on the fact that it limits liability, alone.
The S corporation, for example, protects your personal assets in the unfortunate event that someone sues or files a judgment against your incorporated business. The process involved in running this type of business is a bit intensive, however, and you must host annual board meetings and maintain a board of directors, among other compliance requirements.
A limited liability company also protects your personal assets, and it is a bit less intensive to operate. You may not be able to find investors for your business if you establish it as a limited liability company, however, so, again, you should consider numerous factors before deciding what type of business entity to establish. Find more about business law on our webpage.