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It
Can Happen To You:
Why
Any Sole Proprietorship Is A Risky Business
by
Wayne M. Davies
©
2005 Wayne M. Davies Inc.
Are you still operating your business as a Sole
Proprietorship?
Have you considered incorporating your small business or self-employment activity?
The tax advantages can put thousands of dollars in your pocket every year.
But the Number One reason to consider incorporating has nothing to do with tax reduction and everything to do with
asset protection.
Here's a story to help you decide whether forming a corporation is worth it.
A few years ago, one of my clients, let's call him Jim, decided it was time to stop working for someone else
and start working for himself.
Jim was a plumber, and a darn good one. He's fixed my toilet on several occasions.
It took a couple years of hard work, but Jim's reputation spread fast and he soon had all the work he could handle.
Jim finally had to hire an assistant, a young fellow named Tom.
One rainy Saturday afternoon, Jim got a service call and asked Tom to handle it. This job turned into several hours
of lucrative labor, so by the time Tom was done it was dark.
The roads were slick and Tom was tired.
As luck would have it, another service call came in as Tom was heading home. Jim offered Tom yet another chance to make
some good overtime pay. Tom reluctantly accepted.
Tom thought about stopping for a cup of coffee, but he was eager to get done. As he drove through the torrential
downpour, Tom noticed the brakes in the company truck
weren't working like they used to. He remembered the mechanic saying something about it the last time he
took the truck in for a tune-up, but he and Jim were so busy lately they just forgot to get them fixed.
As he came to the next stoplight, Tom knew he was in trouble. The brakes failed and the truck collided with
another vehicle.
Tom's injuries were not nearly as serious as those of the other driver, who eventually died.
Jim's insurance policy covered all the medical costs, but the liability coverage wasn't enough to take care of the
amount that the other driver's family sought via the negligence lawsuit.
End result: Jim suffered serious financial loss. Because Jim's business was a Sole Proprietorship, he had to use all
of his personal savings to satisfy the claims of the
lawsuit.
So it can happen. And it can happen to you.
Need I remind you just how prevalent lawsuits have become in our society?
So if you are a Sole Proprietor, like Jim, why run the risk of losing your personal assets from a business-related
lawsuit.
If you have employees, you can be held responsible for their actions.
"But I don't have any employees", you say.
It could just as easily have been Jim rather than Tom who was driving in the rain that night. Likewise, it could be
you who is the cause of unintentional damage or some other
business-related accident.
Bottom Line:
If your business is a Sole Proprietorship you need to incorporate because all your personal assets are at risk.
Make the move from the world of Unlimited Liability to Limited Liability.
About The
Author:
Wayne
M. Davies is author of three tax-slashing eBooks for small
business owners and the
self-employed:
The Tax Reduction Toolkit
http://www.YouSaveOnTaxes.com/toolkit
Incorporation Tax Secrets Revealed
http://www.YouSaveOnTaxes.com/secrets
How To Incorporate Yourself For Free
http://www.YouSaveOnTaxes.com/how-to-incorp
Wayne's eBooks are available separately, or
at a discount as a 3-volume set:
The Ultimate Small Business Tax Reduction Guide
http://www.YouSaveOnTaxes.com/ultimate-guide
To
receive a free copy of Wayne's 25-page Special Report,
"How
To Instantly Double Your Deductions"
click
here:
http://www.YouSaveOnTaxes.com
www.YouSaveOnTaxes.com
A
Division of Wayne M. Davies Inc.
4660 W.
Jefferson Blvd., Suite 220
Fort
Wayne, IN 46804
Tel:
(260) 459-3858 / Fax: (260) 459-0124
email: YouSaveOnTaxes@aol.com
http://www.YouSaveOnTaxes.com
http://www.MagneticMarketing.biz
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