Obtaining limited liability is the main reason to incorporate your business. If you are simply a sole proprietor, all of your assets are subject to being taken if you are sued. If you are incorporated, everything changes, you are only liable for the amount you invested at the start of the business. Say, you incorporate a lawn care service. If you invested $350 to buy a lawnmower and other gardening equipment, and your corporation is sued, you are only liable for $350.00.
When Should You Incorporate? When it’s clear to you that you have more assets than you can afford to lose. Many people wait until the company has $100,000 in assets to move from private ownership to incorporation. Your decision can take place at a point far sooner or later, but you shouldn’t wait until you have millions of dollars at risk in your wholly owned private business.