For many new businesses, that is the question. Incorporation is not a magic shield against the risks and liabilities of the marketplace. Many new business people wrongly view incorporation as a sort of blanket protection against personal liability. Others view it as a legal contrivance that offers them protection without altering the basic relationship between partners. It is important to understand any legal step taken - before it is taken.
Incorporation is no exception.
Certainly, this legal structure offers many businesses significant tax and liability advantages. Whether this is the case for your business, however, depends on the specifics of your particular situation. Your attorney needs to understand the long term goals of your business, the areas in which it will operate, and the relationship between all owners and investors. Often the input and advice of an accountant is essential to developing a corporate structure appropriate to a particular business. There are instances, for example, when incorporation can create a tax liability rather than a tax advantage.