Starting up a business can be a potentially dangerous decision. In many instances, a business owner can be held liable for the debts and other obligations that are incurred by his or her business. This can drive people to bankruptcy if they don't take the right steps to protect themselves. Business law in Minnesota provides a number of ways to do just that and ensure that a failed business venture doesn't put your personal life in the red.
Incorporating to Reduce Liability and Other Advantages
One of the ways to limit your liability in a business is to incorporate. Incorporating your business turns it into a legal entity of its own, which has unique rights and privileges. In order to do this, you must file Articles of Incorporation with the Secretary of State. If you do not, business law in Minnesota will consider you a sole proprietorship or general partnership, and you can still be held liable for business debts.
The primary advantage of incorporating is that the liability protection that it offers. Any lawsuits directed at the business or creditors seeking to collect on debts cannot come after the business owner. There are some exceptions in which you can still be vulnerable to a lawsuit, but for the most part you are protected according to business law in Minnesota. Note however that any business owner should be sure to practice good business - if your corporation falls into financial trouble, your future wealth may be at stake even if your personal property isn't.
Incorporating can also offer a business significant tax breaks, especially when it comes to employment taxes. If you form a "C" type corporation, you may also gain additional tax breaks by offering fringe benefits for your employees.
Obtain Good Business Insurance
Another important step in limited your liability in you business is to obtain good business insurance. Business insurance can prevent the circumstances that might put your business into debt in the first place. In the event that your business runs into trouble, the courts may even ignore the liability shield granted by incorporating. It must be stressed that incorporation isn't a universal panacea for troubles with your business. If you do not take all the steps you can in ensuring that your business is run correctly and protected, your personal assets may vulnerable according to business law in Minnesota.
