If you have your own business, or are thinking of beginning one, you need to think of the liability implications of doing so. There are possibly greater legal liabilities you are subjected to as a small business owner that you did not have to consider before you owned a small business.
Another thing that you have to think about when you have your own business is taxes. Small business taxes are handled much differently than personal taxes, so you have to be aware of what is happening with your company taxes. This is a great time to talk with an accountant.
While you most likely can run your small business as a sole proprietor, this is not the best choice in most cases. There are huge liability and tax reasons why you might not want to operate as a sole proprietor. Talking to a professional about these issues is highly recommended.
So what can the average business owner do? Smart entrepreneurs form a business entity to shield themselves from personal liability and to take advantage of business tax laws.
A very common business structure, and probably the best choice for most small business owners, is to think about starting a LLC. A limited liability company (LLC) gives you personal liability protection, assuming it is set up correctly and you completely separate your business and personal goings on. And with an LLC, you have the ability to choose how taxes are handled.
Setting up an LLC is incredibly easy. You can hire a lawyer to do it for you, which is usually the more expensive choice. Or, you can use one of the less expensive Internet business formation services for LLC form. With prices starting at $115, there is no excuse to not form a limited liability company for your small business.
Always meet with a professional to make sure LLC formation is the right structure for your business. At the very least, you need to take some action to make sure that your company is separated from you, to limit your potential liabilities and take advantage of the tax benefits afforded to small businesses.