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Why Form a Corporation?

We at P.K. Hammar Legal are frequently asked the question: “Why should I incorporate?” After all, you are not required to have a corporation in order to do business. So why do people form corporate entities and what is the benefit of doing so? The primary reason is that corporate entities, if properly formed and maintained, shield a business owner from personal liability in the event of a lawsuit against the business. Put another way, if someone successfully sues a business and obtains a judgment against it, the owner’s personal assets, such as a house, automobile and bank accounts, cannot be seized in order to satisfy the judgment. The recovery is limited solely to the assets held in the name of the business. An unincorporated business, such as a sole proprietorship, does not afford this protection to its owner.

Obviously, no business owner plans to be sued. But as attorneys with many years of experience in business and commercial litigation, we can attest to the fact that business owners are served with lawsuits every day. In every case, the lawsuit is an unwelcome surprise to the business being sued, and once the suit is filed it is too late to go back and alter the legal structure of the business to protect assets from judgment. That is why it is essential to discuss the formation of your business entity with an experienced attorney before conducting any business or, if you are already doing business, before any grounds for a lawsuit arise.

While it is fairly simple and inexpensive to form a corporate entity and to draft the associated documents necessary in order to maintain compliance with the law, it is not something we recommend be done without the assistance of a lawyer. Although there are forms available on the internet, the consequences of making a mistake in the selection of the type or structure of the entity to be formed are so great that it makes no sense not to seek the guidance of an experienced professional. We at P.K. Hammar Legal know that running a successful business takes hard work and dedication. In order to help you achieve your goals, we take the time to discuss your business with you, ask questions, and learn about how your business operates so that we can understand how best to serve you.

Call us today at (301) 657-7590 for a free business consultation. You worked hard to get where you are – let us help you ensure that the results of your hard work are properly protected.

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