| In today's litigous business society a business owner's entire life can be wiped out with a single --- often silly and frivolous -- lawsuit. You can work your whole life to build a business or home business and a retirement, only to have it all wiped away with one lawsuit, even if you didn't do anything wrong. Small business people hear about it all the time... the lazy employee who sues on some ridiculous grounds, the "falling" accident scam, you name it. McDonald's was sued for serving hot coffee. People have been sued for giving "dirty looks". You, too, can be sued for virtually any reason on the planet, no matter how ridiculous.
So much for living in a free country where you can be honest and live safe.
But the type of business entity you choose has a lot to do with how safe, or unsafe, your personal assets are if targeted in a lawsuit. Doctors, who are a juicy favorite for lawyers because of their high incomes and large balance sheets, are often well-advised by attorneys and freqently set their businesses up in a partnership or LLC format that offers some protection of their personal assets. If you choose for your home business to be a sole proprietorship, for example, there is virtually no protection of your personal assets if your company is sued.
The type of business entity you choose will also greatly affect your taxes and how easy or complicated it may be run your company. Some forms of business entity are more complex and cost more to set up, while others are simpler and less expensive.
One thing is for sure. In today's sad, sue-happy business environment, how you set up your new home business or small business matters a lot. When you start your home based business or any business, take the time and spend the money needed to consult with competent legal and accounting professionals who can properly advise you on the form of business entity that's right for you.
Please note that we are not providing legal, tax, accounting or other financial advice. Please seek a competent attorney, accountant or other professional for proper advice on legal, tax and other business matters.
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