If you have your own small business, or are thinking of starting one, you need to consider the liability ramifications of doing so. When you are a business owner, you are potentially subjecting yourself to more legal liability than you had before you were your own boss.
Another thing that you have to think about when you own a business is taxes. Small business taxes are handled much differently than personal taxes, so you have to be aware of what is going on with your company taxes. Talking with an accountant is a good idea when it comes to business taxes.
Running your business as a sole proprietor is an option, though it is not usually the best choice. There are several liability and tax reasons why you should not operate as a sole proprietor. Getting professional advice about these issues is highly recommended.
So what can the average business owner do? Smart business owners create a business structure to protect themselves personally from liability and to take advantage of business tax laws.
A very common business entity, and most likely the best choice for most business owners, is to consider incorporate LLC. A limited liability company, or LLC gives you liability protection personally, assuming it is set up correctly and you totally separate your business and personal finances. Also with an LLC, you can choose how you should be taxed.
Setting up an LLC is incredibly simple. You can hire a lawyer to set up your LLC for you, but this is usually the more expensive choice. Or, you can use one of the reputable online business formation companies for LLC corporations. With prices starting at $115, there is no reason to not form an LLC for your business.
Consult with a professional to see if LLC incorporation is the right choice for your particular situation. The least you should do is take some action to make sure that your business is separated from you, to reduce your potential liabilities and take advantage of the tax benefits afforded to small businesses.