Are you thinking of selling your products and services online? Incorporating your online business (or \u2018e-business\u2019) into a private company could be a good option for you. However, whether you will benefit from incorporating your online business will depend on several factors. <\/p>\n\n\n\n
This article will explore the advantages and disadvantages of incorporating your online business.<\/p>\n\n\n\n
The legal concept of incorporation refers to the fact that a company is separate from its business owner. Like any person, a company can: <\/p>\n\n\n\n
One of the main effects of legal personhood is that the law will treat the liabilities of a company<\/a> as separate from its owners, including any contractual obligations and debts. <\/p>\n\n\n\n If you are a sole trader, the law states that your business does not have a separate existence from its owner.<\/p>\n<\/div>\n\n\n\n In addition to sole traders, unincorporated business structures can also include general partnerships. Further, your assets can cover any claim against your online business if you are trading through an unincorporated business structure. <\/p>\n\n\n\n To understand the practical effect of limited liability, you may find it helpful to consider two hypothetical scenarios. <\/p>\n\n\n\n So, consider you want to sell homemade hot sauces you make in your kitchen on an online platform. You come up with a business name, \u201cAmazing Hot Sauces\u201d. You comply with all the relevant requirements for selling food products, but someone gets sick and needs hospitalisation because you did not properly store your hot sauces. You may trade through the name Amazing Hot Sauce. Still, the law will ultimately hold you responsible if your customer serves your business with a negligence claim. For instance, they may argue you should use more care when bottling your hot sauce to avoid making your customers sick. <\/p>\n\n\n\n If a court finds your business liable for your customer\u2019s loss, it will order you to compensate the victim accordingly. However, you may have enough money sitting in your business\u2019 war chest, which you use to settle the claim. <\/p>\n\n\n\n However, if the claim\u2019s cost exceeds the money you have in your business, you will have to settle the difference with your personal assets. To be clear, this might include your savings! You may also need to sell property like your house or car to make good on the claim. <\/p>\n\n\n\n In practice, you should have insurance to help meet the claim. However, if the policy refuses to cover you, the outcome will be the same.<\/p>\n<\/div>\n\n\n\n If you follow the proper procedures for selling foodstuffs in England and Wales, your customer could only claim against your business\u2019 assets. This is because the law sees your business as separate from you, its owner. If your customer\u2019s claim results in damages of \u00a3100,000 and your business only has \u00a350,000, you would not usually be held liable for the remaining amount. <\/p>\n\n\n\n That said, this could result in proceedings which could make your company insolvent. Therefore, incorporation can help you minimise your personal risk should something happen in the course of doing business. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nExploring Limited Liability <\/h2>\n\n\n\n
<\/p>\n\n\n\nOperating an Unincorporated Online Business <\/h3>\n\n\n\n
Operating through a Private Company <\/h3>\n\n\n\n