Consider the liability associated with the choice of a business structure

Consider your appetite for liability. The various legal entities all offer entrepreneurs different protections against liability.

A corporation or an LLC offers you the best protection against being held personally liable for actions by employees or others. But, Leonard DuBoff notes, no form of organization completely shields entrepreneurs from personal liability.

"If you are driving and rear-end my car, whether you're driving for yourself or a corporation, you're liable," [DuBoff]Create? says. The type of business entity you choose won't change that.

The entity affects your liability for the acts of employees, partners and contractors.

• A sole proprietorship provides no liability shield.
• A partnership makes you liable not only for your wrongful acts, but for those of your partner as well.
• If you don't have employees, contractors or partners, a corporation or LLC won't provide much liability benefit.