Eight questions small business owners should ask their attorney

The best way to limit your personal exposure to liabilities generated by your small business’s activities is to form a business entity with the secretary of state. Once formed, your entity provides you protection from liabilities generated by your business. As such, your business’s creditors are limited to the assets held within the business and cannot reach your personal assets.

For most small businesses, the limited liability company (LLC) or S-Corporation entity forms will work well. These two entities are called “pass-through entities” as the small business itself does not pay any tax to the IRS. Instead, the income tax generated by business activities are passed through to the owners.

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