Home business is on the rise and is likely to continue well into the future. Many people who operate a home business put too little thought into an appropriate business structure. This is a mistake that could be costly in the future.

There are many reasons to operate a business through a separate legal entity. For example, there can be tax benefits that cannot be realized using a sole proprietorship. The primary overriding reason to incorporate is to protect your personal assets from exposure to liabilities that may occur in connection with your business. This reason to incorporate exists whether you operate your business at a separate location from your home or whether you run a home-based business. In fact, I would argue that the exposure to personal assets may be greater in a home business for the very reason that the nature of a home business is that your personal assets will be physically located at the same place where your business operates. In fact, your business is operated out of one of your biggest personal assets; your home.

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In most cases, the answer to this question is yes. In fact, the reasons to incorporate your business if you are operating from home are just as overwhelming as a traditional brick and mortar business. Your personal assets are exposed to liabilities and obligations arising from your business if you do not operate your business using a separate legal entity. When you operate your business from your home, it is even more difficult to create division between your business and personal activities and assets. This situation could actually lead to greater exposure of your personal assets from the operation of your business when you are doing business from home

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