becoming a corporation

[AceSprinkleRx]

Originally Posted by CuttingEdgeLandscaping

I incorporated to protect my personal property (home, cars, savings) if there is ever an accident and I am sued. At least that was the advice I was given.

My background is commercial insurance. Incorporating has no effect on your insurance rates. But you must be certain to have the 'Named Insured' read accuratley on your policy for proper coverage. Whether it be a Sole Proprietor, Partnership, Corp., LLC or even LLP.

Example if you're a C Corp for instance and the Named Insured reads 'ABC Lawncare, Inc' all your employees, directors, partners and officers are included within the General Liability limits.

If your Named Insured reads 'ABC Lawncare' or 'John Doe dba ABC Lawncare' and you are indeed incorporated, you have gaps within your corporate coverage and if a lawsuit develops the corporation would not have any coverage- or protection - for ensuing defense or settlement costs.

The opposite would also apply. If the Named Insured reads 'ABC Lawncare, Inc.' and you're not incorporated (don't laugh I've seen this), you wouldn't have any coverage for you as a sole proprietor or individual.

In the end it shouldn't effect your rates, but your coverage.

Mike

[pagefault]

You might want to do a search on "piercing the corporate veil" to understand how your protection can be eliminated. One of the most common mistakes is commingling funds. Keep your business and personal finances 100% separate. Right down to that pack of gum you just bought when you were gassing up the company truck.

Piercing the corporate veil is a term attorneys use to refer to proving that the corporation only exists on paper. If you know what attorneys look for, you will have a better idea of how to protect yourself. Protection is limited, but it can be nonexistent if you aren't careful.