When do you need to incorporate?

One of the best features of incorporation is that it provides protection from personal liability. If you have personal assets that you want to be sheltered from liability from creditors, incorporation can help you do this. However, you have to weigh the costs of incorporating with the potential benefits. Once you’ve incurred the expense of setting up a company, you have to maintain it, which means filing annual statements and returns. You may need to hire someone to take care of this paperwork for you. In weighing the pros and cons, some questions to ask yourself include: Are you in a high-liability business? Can you protect yourself adequately through insurance? Finally, you need to recognize that incorporation, while it shields you from liability, is not an absolute, particularly if you have to sign personal guarantees with your landlord, or to secure loans from your bank.