No business is too small to incorporate because no business is safe from lawsuits. Obviously, the larger enterprise has more need for corporate protection if only because it is a larger lawsuit target, but still no business, no matter how small or seemingly safe, is immune from legal and financial disasters. Here is why we say no business is safe. A wealthy widow from our neighborhood, and a client, enjoyed spending her weekends selling imported dolls at a local flea market. Not long ago she sold a defective doll. A customer's three-year-old daughter punctured her eye after dislocating the doll's arm, exposing a large nail. This lady is now defending herself and her insignificant wealth against a $5 million products liability claim.
Had she incorporated her tiny kiosk enterprise, her corporation, and not herself, would have the liability; her personal assets would not be in jeopardy. Why didn't she incorporate? Her accountant discouraged her. "You don't need a corporation. Why spend money to incorporate to run a nickel-and-dime weekend business?" Bad advice! Had she incorporated, she would not be worried sick about losing everything she owns. Incorporating is your