Benefits of an Entity

The foremost benefit of an entity is the fact that the entity shields the business owner from liabilities that arise from their business. A fact of transacting any type of business is the possibility of being liable to someone for something that went wrong. For example if the business was unable to meet the terms of a contract. If the business is operating as an entity (and the business owner did not personally guarantee the contract) the person suing would usually only be able to sue the entity. If the business is not operating as an entity, however, the person suing would most likely sue the business owner individually. If the suit is successful and a judgment is entered against the business owner, the business owner’s personal assets could be seized to satisfy the debt. But if the judgment was only issued against a business owner’s entity, however, the business owner’s personal property (his home, car, etc.) would most likely be protected because only the entity’s property could be seize to satisfy the judgment.