In a recovering climate, many entrepreneurs may consider starting the companies they’ve always wanted. The decision about whether to incorporate a company should be simple, according to VentureBeat.
The source says business incorporation offers entrepreneurs both short-term and long-term benefits. To start, forming an entity protects entrepreneurs from personal liability. If contracts are breached, both individual partners and a company can be sued within a partnership, whereas formal, incorporated entities can only be sued at the corporate level.
Additionally, business incorporation makes it easy to change leaders. Shares can simply be sold to change owners. With partnerships, VentureBeat says it can be tricky to change ownership and sometimes individuals can still be owners – without doing any work – or the business risks dissolution.
Plus, the source says business investors are more likely to invest in formal structures than partnerships. Corporate entities protect VCs and bank lenders from many of the same risks they protect owners against.
Business owners stand to gain from taking measures to help secure funds. Recently, the Obama administration proposed a measure that will support $30 billion worth of loans to businesses through community banks, reports USA Today.