Hi everyone. In the same theme of protecting assets, here is a post about choosing the right business entity. Again here is the disclaimer. The information in my post should not be considered legal or financial advice. Please contact a licensed professional or an attorney before choosing the right business entity. If you have a part-time business or thinking of starting one, then you should consider forming a business entity. The reason is that it provides significant tax advantages and also separates your personal income from business income. For example as an individual with a job, the government takes tax out of your paycheck before you get paid. In a business, you pay taxes after all other things are paid, like salaries, office costs, mileage etc. So naturally you are paying less taxes. What type of business entity is good for you? Well it depends on what kind of tax advantages you are looking for and what type of business it is. Are you going to be the sole proprietor or are you going to partner with someone. In the US there are four major entities you can create. The Limited Liability Company (LLC), which is by far the most common and popular, S corporation, C corporation and Limited Liability Partnership. Only a professional can help you make that choice. It makes sense if you are in a service business like catering etc. The reason is that if someone gets food poisoning after eating food you catered, they cannot sue you, they will sue the corporation. Besides many banks and financial institutions are more open to lending money to a business rather than individuals. In my county, you cannot get certain licenses unless you are a business. If you are partnering with someone, even if it is your family member of your best friend, get a legal agreement in place. It will protect both of you and will keep everything in the open. In certain partnerships, you will be responsible for things that your partner does. Again, consult a professional to put an agreement in place. Look you work hard to earn money, why not keep more of it.