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How do the benefits and disadavantages of a sole proprietorship compare to that of incorporation?

I have been operating my small business as a sole proprietorship for the past two and a half years. I've had losses the past two years but now that my business is really prospering, I'm wondering if it would be in my best interest to incorporate and what the benefits would be to do so? I hear that S-Corps are the best option for small businesses--is that true?
Brad Sugars answered January 24, 2008
URL: http://www.entrepreneur.com/answer/221282
Great questions--let's deal with them one at a time.

Incorporation V's Sole Proprietorship--Unless a business is very small, there is really no question that you should incorporate. From a legal and financial standpoint, this is a much better choice. It also will give you something you can sell far easier should you ever want to.

As for which format is better--C-Corp, S-Corp, LLC or any other form of structure--that question is answered differently in every state; even some county or cities will make the answer different. Your marital status and desire for estate planning also impact the answer, so the best advice I can give to you is to find a great attorney or accountant who specializes in structure and planning.

All the Best,
Brad Sugars

Brad Sugars is the founder and chairman of ActionCOACH. As an entrepreneur, author and business coach, he has owned and operated more than two dozen companies including his main company, ActionCOACH, which has more than 1,000 offices in 34 countries.