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When to Incorporate?

When do you stop contracting and start a business?



8:38 pm on Feb 22, 2002 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

How much should you be earning a month online before you decide to stop contracting and 'officially' start a business?


9:55 pm on Feb 22, 2002 (gmt 0)

10+ Year Member

Well, from someone with a bit of business background, I'll answer from a Canadian perspective:

You incorporate to make your business a separate legal entity. There are a couple of reasons to do this.

Firstly, when someone sues the business, your personnel assets are somewhat protected. (There have been cases of 'piercing the corporate veil' e.g. getting at directors assets.)

Secondly, if partnering, then you will take the time to draw up a legal partnership agreement. This allows easier extraction of one or more of the partners because the terms are known in advance.

Thirdly, it somewhat separates the founder from the business and can make it easier to sell later. However, sole proprietorships can also be sold.

You should check with legal advice whatever you do (your countrie's laws will vary from Canada's). Most universities have a free legal consulting arm with law students but they will know the basics. Alternatively you can check out a book at the library on incorporation (try a do it yourself book as it will explain the legal implications of whatever route you choose).

My last comment, if you are contracting and bringing in cash, you have a business.

Best of luck,
A proud Canadian


10:22 pm on Feb 22, 2002 (gmt 0)

10+ Year Member

Just thought of you "Lawman". What is your opinion?

(edited by: Shane at 10:31 pm (utc) on Feb. 22, 2002)


10:31 pm on Feb 22, 2002 (gmt 0)

WebmasterWorld Senior Member eliteweb is a WebmasterWorld Top Contributor of All Time 10+ Year Member

When I incorporated my business I did so before I took in my first dollar. The reasons behind it were to protect my personal assets and well taxes. I incorporated in NV. I was entertained having my own checks with the company name on it and the plaque.

Do it to protect yourself, dealing with SEO is a risky business what if you get their site sh1tlisted and then they come after you, hell it could be something that you didnt even do.

Still having the business in front of you helps you out. Its a nice way to do things.


10:38 pm on Feb 22, 2002 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

I agree with previous posts.

We are UK based, and made ourselves a 'limited company' before we took the first order.

You have to protect yourself against excessive litigation, otherwise you may end up losing the house, the car, the hifi etc.

Given the judicial systems knowledge of the Internet, I wouldn't trust them to find in my favour even if I had a cast iron case.

Hopefully, it will never arise - best be safe though, eh.


11:04 pm on Feb 22, 2002 (gmt 0)

We incorporated right off the bat as well. One of the main reasons was that having the "inc" made us appear more established setting us apart from those doing this part time. Also I found one of the hardest things was when you start growing getting clients to buy from the business and not from you personally. Getting them used to a staff was easier than if we had been a sole proprietorship.

Also if you give yourself the appearence of a larger company you will find yourself trying to emulate what is on paper. As they say the best way to become successful is to act successful.


11:16 pm on Feb 22, 2002 (gmt 0)

10+ Year Member

I also incorporated before the first $ come in (actually before the first anything was done). This was done on advice of legal counsel and my wife. Fortunately, in my case, they are one and the same.

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