I am prejudiced in favor of LLC form of business. While you cannot insulate yourself from personal liability for your own actions, as an LLC owner, you can make business deals, sign contracts, etc., as the agent for the LLC and eliminate your own personal lliability for business liabilities. If a personal guarantee is required, of course, your personal liability would still attach, but depending upon the kind of guaranty, it may only be secondary. You also get the tax benefit of being a sole proprietor, with profits of business being taxed as your income, at your rates. No double taxation, as with dividends of corporation. You can also put yourself on the payroll, issue paychecks, etc. (don't forget to file payroll returns and make tax payments), or you simply distribute profits as they are available and file quarterly estimated tax returns with state and federal gov'ts. Check with your CPA as to which way is best for your business.
If you choose LLC form, remember that it is a separate entity and that you must do everything required by law to maintain that separate identity. Failure to do so will cause you to run the risk of losing that protection from personal liability.
Answered on Apr 16th, 2013 at 10:45 AM