Achieve the First Step - Choose a Business Entity
Limited Liability Company ("LLC") vs. Corporation
For the sake of using an entity, a limited liability company ("LLC") or corporation, if properly structured, can do a great deal to protect the business owners from personal liability. Depending on the structure, the LLC and corporation can be structured to provide similar protections as well. The biggest questions in choosing between the two is how each type of entity will suit the business and owners in regard to tax treatment. For an explanation of different tax treatment between an LLC and a corporation, read a great summary summary from Entrepreneur here, that covers what are generally the major tax concerns for business owners.
Partnerships
Partnerships, in some instances, do not enjoy the same protections from liability that an LLC or corporation can offer, and the tax benefits can also be mimicked through an LLC, depending on how the LLC is structured, through tax elections and through the operating agreement.
Sole Proprietorships
A sole proprietorship offers no protection from personal liaiblity for the business owner, and all income is taxed on the personal level. Operating a sole proprietorship without the protection of a business entity is not recommended. An individual can form an LLC or corporation even if there are no business partners.