As a small business grows, there comes a time when the owner(s) should consider incorporating the business. A corporation is a separate entity recognized by the state of domicile for the business. It is as if a new life is created. The state acknowledges the existence of this entity and therefore grants limited legal rights similar to those rights possessed by the citizens of that state.
Separation of Family and Business
Many small businesses use the family to run the business. Incorporating makes it easier for the owner to separate the business from the family. He can remind the family members that the company owns the vehicles, the company controls the assets. The company owes the money for vendors and debts. This way, the family is protected from feeling obligated to provide financial assistance or provide personal guarantees for debt.