There are some important things to keep in mind when you start a small business. A few come to mind such as: What kind of product or service will I offer? How will I find customers or clients? Will I work from home or an office/storefront?
Will I Lose My House?
One of the questions you might not be asking is: If my business runs into trouble, will I lose my house? For many small business owners, this is a real concern, but I’m here to tell you there is a way to minimize it, and it does not simply involve buying insurance.
If you start a business as a sole proprietorship or a partnership, you could have personal liability for any problems that may arise from the business. For example, if you decide to become a dog-walker, you might think you have no reason to organize a business. It’s just you walking dogs for gosh’s sakes. But, what happens if a dog gets away from you and it hurt/killed? What if a dog you are walking injures someone or another dog? What if you are accused of breaking/stealing something when you pick up the dog?
You could be held liable for any of these kinds of things and if you are a sole proprietor, the person suing you can come after your assets. However, if you create a limited liability company or similar entity, you could shield your personal liability.
With this kind of structure, if you were held liable for something while operating your business, the person coming after you would only be able to take the business assets (ie poop bags and extra leashes) to satisfy a judgment LLCs do require you follow certain formalities such as reporting and renewing them, but that is a small price to pay for the shield from personal liability.