Posted: January 09, 2013
Three Reasons You Shouldn’t Truck Along As A Sole Proprietorship
Getting more from your truck accessroy business will depend on how the company is set up.By Deborah Sweeney
It’s easy to get settled into a bit of a routine when business starts rolling in and you’re working on modifying trucks and selling parts. You meet with new clients, keep up with product releases, fulfill some orders, and run your business as best as you can. But that type of mentality can wind up getting you in trouble since you need to constantly be thinking of new ways to use aftermarket accessories to achieve the style and performance your client wants. You can never allow yourself to stagnate, but as your business grows you need to make sure your business structure doesn’t become outdated either. Most businesses stick with the default structure of a Sole Proprietorship, or Partnership if there was more than one founder, but these structures can actually leave you woefully unprotected. In the hopes of helping everyone protect themselves and grow their business, here are three good reasons why you should outfit your own business with a new structure.
Limited Liability Companies and Incorporations Help Separate Your Business Debts and Personal Assets
If everyone had the talent and dedication to make money with their own company, they would. But there is always an inherent risk in starting a business, and at times the stars align and everything that can go wrong, will go wrong. If that type of situation unfortunately falls on your own store or shop, you’ll be happy you formed an LLC or incorporated. Both structures turn your store or business into its own separate, legal entity. That means the company can have debt, settle in another states, make a wage and most importantly, it is responsible for its own finances. Of course you’re still the one running the show, but since your business is its own entity, debt collectors cannot go after your personal assets to pay for your company’s debts. Ideally things would never get that bad, but the universe has a funny way of smacking the backs of our heads when we least expect it.
You Get More Space to Play With Ownership Structures
This is certainly not applicable to everyone, but sometimes it’s nice to be able to change how the ownership of a business is divided and structured. Limited Liability Companies have a very centralized ownership structure, and any member, regardless of how much they contributed to a company, can be named a manager of the LLC. If you wanted, you could even set up the business so there isn’t a difference between the owner and managers. This allows you to bring in partners and managers to help day-to-day operations as the business expands. A Corporation can do the same thing, but it’s a bit more complicated and involves creating a special class structure of stock. If you think you’d rather have a Corporation this type of flexibility is still available. While it may not seem like much when you’re first starting out, being able to name people you trust as managers and partial owners of different parts of your business can be very useful as it allows you to focus your energy on the aspects of your business that most need your expertise.
Having An LLC or Inc. Lends Your Business Credibility
Granted this point is a tad more cosmetic, but in this industry cosmetic changes can be just as important as internal ones. Forming a Limited Liability Company or a Corporation gives your business a professional title that you can put after your company’s name, and that does grant some immutable qualities to outside perceptions of your company. You spent the time and money setting up this business structure, which also helps to distinguish you from the guys doing repairs out of their buddy’s shed. When a customer is flipping through the yellow pages or clicking around online, sometimes LLC or Inc. after a name can be the thing that convinces them to take their business to that particular shop. An LLC or a Corporation simply helps a business sounds more permanent, and thus lends it some credibility, along with the main benefit of helping to protect your assets.
Filing for an LLC or Corporation takes some time and can be a bit confusing, but as long as you stay patient, and maybe talk with a professional, it’s well worth the effort. And, while you’re filing paperwork with the state, you should consider trademarking your logo and anything you use to advertise. After all, a couple of forms are nothing if they help you to worry less and protect your business. That way you can get right back into what you’re actually passionate about – running your shop and fixing up trucks.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Twitter @deborahsweeney and @mycorporation.