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Small business owners in SC: Consider incorporation as a safety net

Small businesses are doing well in South Carolina. The United States Small Business Administration reports that there are 384,274 small businesses in the state. This translates to 96.9 percent of all of the businesses in South Carolina. The report also notes that the startup rate was higher than the exit rate - meaning the number of small businesses is growing.

Entrepreneurs within this sector can take proactive steps to help better ensure that their businesses continue to thrive. One step involves incorporation.

How do I know if it is time to incorporate my business? Some business owners may be leery of incorporating their business. It does take a bit of time and results in extra paperwork, but some situations the benefits outweigh the risks.

The fact that incorporation provides protection from liability is well known. When using a business entity, your personal assets are generally shielded from business risks. In addition to this level of protection, business owners should also consider the benefits of formality when incorporating their business.

How does formality provide a safety net? A recent piece in Accounting Today dug into this issue, noting that even family businesses can benefit from a level of formality. As noted above, having a business incorporated requires a certain level of paperwork. Part of this paperwork generally spells out exactly how ownership is split. This can be useful if there are ever disagreements in the future about how the business should run.

Can I incorporate on my own? There are a number of different forms of incorporation to consider and the right form will depend on the details of your business. This fact combined with the amount of paperwork and other business issues that can arise when going through the incorporation process make it best to seek legal counsel when incorporating your business.

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