Know when to put up the corporate veil

By Dave Ramsey

Dear Dave,

I started a small business a few years ago. Since then, it’s grown larger than I anticipated. When should you change from a sole proprietorship to something else?

Mike

Dear Mike,

I would incorporate the business into a Sub-S Corp when it becomes large enough that liability and lawsuits are a concern, especially if you’re in a business that is litigious in nature. I ran my company as a sole proprietorship for a few years, but once we grew to 20 or 30 team members and saw the potential for bad things to happen, we changed to a Sub-S.

Incorporating is also a good idea if you’re worried about protecting your personal assets. If you’re worth a few million and decide to open a business, the last thing you want is for somebody to sue you and take all your money because they fell down on your property and bumped their head. You can keep that from happening by standing behind what lawyers call “the corporate veil.”

Make sure you’ve got liability insurance and good basic business insurance in place, too. A corporate veil is always a good idea once you’ve got some wealth or your company starts to generate a lot of money!

Dave

Tithing and church-shopping

Dear Dave,

We’ve always gone to church and given our tithe, but recently we’ve decided it’s time to find a more grounded place to worship. During this time should we continue to give to our current church, or give to a charity instead? Does God really care where we give this money?

Amanda

Dear Amanda,

I appreciate that you take the tithe and giving very seriously, but I doubt that God is wringing His hands and worrying about the situation. I mean, it’s not like He needs the money. Giving isn’t about making a deposit into God’s bank account or building up brownie points, and tithing isn’t a salvation issue, either. It’s about changing our hearts and our minds. It’s about being a little less selfish and a little more Christ-like. I think it makes God smile when we put other people’s needs ahead of our own wants and desires.

There are some pretty strong indications in Scripture that a tithe – which is a tenth of your income – should go to your local church. So I’m not sure that a generic charity is the answer in this situation. I’ve had times in my life when I changed churches, and in the periods when I didn’t have a church home I’d write out the checks just like normal, but leave the “pay to the order of” portion blank. This way, the money was already accounted for in my mind and in my checkbook. Then, when I found a place I really liked, I’d complete the checks and give them to that church.

Honestly, Amanda, I think you’d be OK continuing to tithe to your current place of worship until you find a new church home. It would probably be OK, too, if you did what I did, or gave your tithe to one of the churches you visit while you’re looking. God’s not going to whack you on a technicality like that, and throw you in the penalty box. It’s all about learning to be a giver!

Dave

Dave Ramsey

Dave Ramsey is a seven-time No. 1 national bestselling author, personal finance expert, and host of "The Dave Ramsey Show," heard by more than 16 million listeners each week. He has appeared on "Good Morning America," "CBS This Morning," the "Today" show, Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions. Read more of Dave Ramsey's articles here.