I often write about the importance of Corporate Compliance and Corporate Formalities, specifically the risks that business owners face if they do not address these crucial areas regularly. But what about the thousands upon thousands of Sole Proprietors out there in the business world? What type of risks do they face?
The answer is simple: Sole Proprietors who operate without the liability protection of a Corporation or LLC face Maximum Risk! While it's true that the Corporateve Veil provided by a Corporation or LLC requires ongoing maintenance and management in order to remain intact, at least the possibility of protection is there. For those business owners who operate as Sole Proprietors, never having formed a Corporation or LLC, the possibility of protection is non-existent.
When a business owner operates as a Sole Proprietor, there is no separate entity from the individual business owner. This means that the business, and its owner, operate as one and the business owner is ultimately liable should anything go wrong in the business. This means that the business owner's private assets would be exposed in any lawsuits or judgments against the business.
Honestly there is no good reason for a business owner to operate this way and live under the cloud of exposure, day after day after day. It is possible that some business owners believe that the cost of incorporating their business, or the requirements to maintain it are just too much for them. I would contend that it is typically much more affordable than the business owner might think, and I can assure you that it is a very small fraction of the price that a business owner would pay should they ever face legal action against them as a Sole Proprietor.
I will be writing about this more frequently in the weeks to come as Safe Shield is kicking off a major Sole Propietor Conversion campaign. We are committed to spreading the word and alerting business owners who are operating as Sole Proprietors of this unnecessary risk.
As always, if you would like additional information about this please contact Safe Shield.