There are many small business owners that have yet to incorporate their businesses. There tends to be an anxiety with the legalities of incorporating a business, and many business owners do not realize the risk of not having their business incorporated. Here is a short guide to finding out if incorporation is right for you and your business.

You do not have to be a big business to have your company incorporated. Incorporating your company just allows for protection of your company if your company were ever to be sued. Many people think that the likelihood of their small business being sued is slim to none and therefore don't see a need in protecting themselves. However in today's society you can never be too careful. Let's say that you are a reseller for children’s toys that were made in China. You sell a particular toy to a customer and then that customer ends up getting lead poisoning. You later find out there is a recall of those toys because they contain lead. However since you were the one who sold the toy, you are liable for it.

Typically people choose to incorporate using an LLC or a corporation. An LLC (Limited Liability Corporation) is a little more casual than a corporation as you are not required to send in minutes to the state and hold official business meetings. The only difference between the two is that corporations have been around longer and have been tried in courts countless times. No court has penetrated the safety of a corporation. However LLC's have not been around long enough to have been tested in the courts thoroughly. In other words if you are a small business, an LLC is probably sufficient for you. However if you are paranoid about being sued you may want to do a corporation to be on the safe side.