If you're a business owner, and you are concerned about limiting your personal liability for business debts, you should consider organizing your business as either an LLC, (Limited Liability Company), or a Corporation.

Conducting business when organized as a Corporation or an LLC, (Limited Liability Company), brings a large number of opportunities and benefits. Financial institutions and other businesses tend to prefer conducting business with companies organized as a corporation, rather than a sole proprietorship. Many laws also favor Corporations and LLCs over sole proprietorships. Also, it is usually far easier to capitalize a corporation by selling shares of stock, or securing loans.

Anyone doing business with the public is at risk of being sued. It is very important to mitigate this exposure as much as possible. The two best defenses for business are avoidance of a suit by minimizing any risks, or liability insurance. The best way for owners of a business to reduce their personal liability exposure is either to incorporate their business, or form an LLC. When a corporation or an LLC are sued, there are provisions in the law to protect the personal assets of shareholders and mangers from any damages the company may become liable for.

The LLC (limited liability company) is the newest form of legal business entity. It has become very popular among entrepreneurs and professionals. State laws and federal tax regulations controlling how an LLC is taxed are evolving with very favorable trends toward small business, much like the advantages afforded Corporations.

Utilizing the most advantageous organization for your business structure will allow better control of tax liability and reduce risks to investment capital. Many businesses start as a sole propietorship, or a simple  partnership, because these are the easiest organizations to form.  These type organizations however, do not usuallay provide the best environment in which to operate a business.  Some advantages of a more formal structure such as an LLC or a Corporation include such things as separation as a legal entity, protection of the personal assets of the owners, protection of the Company assets from the owners and officers, certain tax advantages, establishment of a business credit line, some employee benefits are deductible,  it is easier to solicit investors, borrowing capital is easier, the business enjoys more credibility with the public, and the owners can have some anonymity.