Don’t make the all-too-common mistake of thinking you don’t have to incorporate your small business because you’re just “a one-person/home-based/part-time business.” If you’re running a legitimate business—no matter how small—it needs to be incorporated.

Incorporating your business essentially creates a shield between your business and the personal you. One important reason to incorporate is to protect yourself and your assets from lawsuits.

That’s because no matter how small or informal your business is, you could be sued. Suppose your business hits a rough patch and you can’t pay a business debt. It’s possible the creditor will take you to court to get their money back. Or what if you run a party planning business and a child is injured during a birthday party you planned? Will the parents sue you? If you operate your own accounting company, you could be held liable if you make a big mistake on a client’s taxes.

In these and countless other cases, if your business is not incorporated and you are sued, all your personal assets could be at risk—including your savings, possessions, and possibly your family home. And even if the lawsuit is baseless, you still have the legal costs involved in defending yourself in court.

If you are the only person in your business, and you haven’t taken steps to determine a legal form for your business, by default you’re considered a sole proprietor. If you have formed a general partnership with another person, your personal assets are still not protected.

So how does incorporating protect you? When you incorporate your business, it creates a new legal entity that’s separate from its owners. If your corporation owes a debt or if it is sued, the business—not you personally—is liable.


click the link below to know more about what is required to own a registered business or company in Nigeria. Scan the barcode attached below to Message Ideal Integrated Services on WhatsApp.

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