Not sure whether it makes sense to form a Virginia corporation or Virginia LLC? Worried it won't be worth the money you spend to set it up? There are plenty of great reasons to form a Virginia corporation or Virginia limited liability company. Here are my top 5 reasons:
- The absolutely number one reason to form a corporation or LLC is for personal asset protection! A corporation or LLC separates your company's assets from your personal assets (your home, your car, your savings). If your company hits a period of financial difficulty or if it gets sued by someone, then your personal possessions won't be available for any of the creditors of the corporation or LLC. In most cases, creditors will only be able to come after the corporation for its debts, which can save your house and other personal possessions.
- If you are organized as a corporation or LLC then it is possible to sell a share of your business to investors to raise money. Corporations have "shares of stock" and LLC's often have "membership units" which represent the ownership of the company and which can be used to attract new capital for start-up costs, expansion or acquisition of other businesses.
- There are serious tax benefits to operating as a corporation or LLC, including enhanced deductibility of certain business expenses that may not be available otherwise.
- Corporations and LLC's can have an unlimited life and are easily sold and transferred to heirs. Since they are a separate entity, corporations and LLC's can survive beyond the life of any individual, which allows it to be passed on to the owner's heirs after they pass away. They can also be easily sold if the owners decide to sell the business.
- Finally, operating as a corporation or LLC adds credibility with your customers, suppliers, and partners. Having "Inc.," "LLC," or "Co." after the name of your company shows that you're serious about your business and have a high level of professionalism – both good things when you're striving to succeed with your business!
Wondering how to choose between a LLC or corporation for your business? Read about the top five differences between Virginia LLC's and Virginia corporations.
Need more specific advice for your situation? Check out my consultation service where you can discuss your situation and questions with a licensed Virginia attorney.