The main benefit of incorporating your business (or forming a Limited Liability Company) is to protect your personal assets from the liabilities of your business. Having a formal entity can give credibility to your business as it shows you have taken formal steps to set it up and have the follow-through to maintain the company. Corporations and LLCs continue to exist even if ownership or management changes. Sole proprietorships (and partnerships, to some extent) end if an owner dies or leaves the business. Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners. There are tax consequences which arise from establishing your business as either a corporation or a LLC, but depending on your goals, you may be able to avoid double taxation of profits.
US-centric companies should keep in mind that there are different approaches to “free” speech in Europe and elsewhere from those in the United States. Because of the different treatments, questions about which jurisdiction’s* laws govern content on the internet become important, especially when content is stored in data centers (the “cloud”) that are accessible over the Internet from different countries
A recent case in France involving Twitter is focusing on the disparity in jurisdictional approaches. A French court ordered Twitter to identify people who had posted anti-Semitic and racist entries, breaking a French law against racist speech. Twitter has said it only divulges identity of users in response to a valid US court order, the jurisdiction where its data is stored. It has already removed the content from its site in France, the jurisdiction where the posting was violating the law.
Twitter does not have an office in France, which also plays into the jurisdictional question. In the past the physical presence of a thing or a person helped determine which government’s laws prevailed, but the ability to access data makes this issue irrelevant. Complicating the issue is that in other circumstances and in other jurisdictions, Twitter has touted itself as a special defender of free speech. Think of the uprising in Egypt. There is a natural tug of war between security concerns and the need to protect privacy.
This conflict between the laws of different jurisdictions makes it difficult for companies doing business around the world over the internet.
*Jurisdiction indicates which legal authority has the right to deal with and make pronouncements on legal matters and to administer justice within a defined area of responsibility or geographical area such as a sovereign nation.
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