When you run a business, it's important that you protect yourself and your personal assets. If you decide to have a sole proprietorship, you run the risk of being held liable for anything that goes wrong with your business. That means that if your business goes bankrupt, you may go bankruptcy as well.
To avoid this, you should open one of two kinds of business entities. One, a single-member LLC, is a limited liability company recommended for small businesses. A corporation, on the other hand, is a large business that protects its owners from liability. Corporation entities are best for large businesses that may want to encourage investment into its products.
It's always important to protect your personal wealth from business liabilities. For example, if you are running an ice cream parlor as a sole proprietor and end up earning less than you make, the only option for you may be bankruptcy. However, lenders can turn to your personal assets to decide if there's anything of value for them to collect on. If you had chosen another LLC entity instead of being a sole proprietor, then your personal finances and assets would have been off-limits.
Business law is complicated, and it's no surprise that you want to know as much as possible before opening your business. Your attorney can talk to you about business formation and planning, so you make good legal decisions now to protect your interests later. Our website has more information on what to expect when you plan to open a new business, whether it's a corporation or small organization.