Are you operating as the sole proprietor for your business? If that is the case, Scott Johnston, one of CBM’s partners and Business Law lawyers has all the insight on whether or not you should incorporate your business, and why you are liable.
One of the most common questions that is brought to the CBM business law team is, “what are the advantages of incorporating my business?” When you are operating as the sole proprietor in your business, you are personally liable for all of the debts of your venture.
Incorporating: Limited Liability
When you decide to incorporate a new company in British Columbia, and then decide that you will be running that business yourself, there is a concept you should be aware of called “limited liability”. This concept has been around for hundreds of years. What this means is that your liability as an individual is limited to what you’ve paid for your shares of the specific company.
The company is a separate, distinct legal entity that carries on business for you. Your newly incorporated company is the one that enters into all future contracts with customers and suppliers. It also signs the lease with landlords and is responsible to your employees and independent contractors as opposed to you as an individual. Thus, limiting your personal liability.
When you run a sole proprietorship many clients often refer to it as their business or their company. When this is the case, you don't actually have any limited liability. You have unlimited liability. This means your personal bank accounts, your home, your vehicles, and your investments are all on the line in the event that there's any litigation or claim against your operations.
You can see Scott Johnston, CBM’s Partner and Business Law expert speak more on the topic here.
Whether your business is small, medium, or large, CBM’s Business Law Team can offer you practical legal advice on a wide range of matters related to your business. With experience in a variety of businesses, we can help guide you through decisions. If you have any questions or concerns regarding Business Law, we are here to help. Feel free to Contact Us Today.