If you listen to the radio even a little bit, you know that someone is out there 24/7 (And there is no depth to how much I hate that phrase. It’s right up there with “Billion with a ‘B’” and “The greatest thing since sliced bread”) telling you that you must incorporate.

“Incorporate or risk losing it all,” they implore. Or, “The advantages of incorporation are incalculable, including your ability to purchase assets through your corporation; which means that you pay in pre-tax dollars.” And on and on.

This is then followed up by an ad telling you that they will help you incorporate. They’ll even give you a shiny new minutes book for free - just as long as you use their handy and quick service.

At this point, I’m hoping you are thinking, “Somebody has to pay for all of these ads they are running” and “I wonder how they recover the money that they are spending by mailing out each ‘free’ packet of information and forms that is sent by first-class mail that very same day”.

But what you are likely not thinking is this … “Once I become a corporation, must I then behave like a corporation?” 

To which the answer is a resounding “YES” - you must.

Which means that you must:

• Have regular Board or Director Meetings.
• Annually publish, for all to see, a list of all of your shareholders and stakeholders.
• Produce regular financial data, including income statements and balance sheets.
• And most importantly, you must  behave like a corporation, from the moment you incorporate and for time immemorial thereafter.

Now for some people, this is no problem whatsoever. Perhaps their founder just loves to do this kind of stuff. (Although if he or she does, then I’d be mighty wary of investing in or even doing business with that company. Remember “You’re either making something or selling something, and if not, then what the hell are you doing for your company because you are overhead!)

It’s a rough and tumble world out there, and they tend to use real bullets. Incorporate if you must. But once you do, be sure to then operate like a corporation. Remember the first time you screw up and try to use your ‘Corporate Shield’, the other guy’s lawyer is likely to pierce it by proving that although you claim corporate protection, you are not entitled to it because you have not behaved like a corporation.