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Every home based business owner has the choice to structure and operate their business in one of several different forms or entities. Each form has advantages and disadvantages. Without going into all of the details, I can tell you from experience that LLCs (limited liability companies) have become the structure used by most small businesses. One of the most important reasons or advantages for forming any legal entity like an LLC or corporation to run your business is LIABILITY PROTECTION.

I don't need to tell you that a growing lawsuit epidemic is going on and it only appears to be getting worse. Statistics reveal that 1000's of lawsuits are being filed each week and small business owners are prime targets. It may be a disgruntled former employee . . . a customer . . . a business competitor . . . a total stranger . . . some government agency . . . the list goes on.

One expert said your chances of being sued are higher than your chances of going to the hospital this year. I think that may be a bit of an exaggeration . . . but I do know that more lawsuits are being filed all the time . . . and starting a business only increases your risk.

With that said, I want you to know that I am an advocate for small business people. They are great . . . they provide support for many people and help make dreams come true. Small businesses including home based businesses are the back bone of our society and one of the main supports of our national economy. I grew up with parents involved in a small business. I beleive whole heartedly in small businesses.

But, small business owners need to protect themselves. The most important step you can make to protect yourself is to operate your business activities through a properly formed and maintained entity like an LLC. If you do nothing, then by default you are considered a sole proprietor which means your personal assets are at risk if there is a lawsuit.

The LLC entity was specifically created by law to provide a layer of protection between the business and its individual owners. With our lawsuit crazed society, the number of LLCs being formed has grown by over 90% in the past few years. The main reason is protection.

Through intelligent business planning, small business owners can reduce the risks. Many new business owners think that lawsuits and personal loss will never happen to them. Please dont make that mistake. I've seen it happen. Once a lawsuit is filed, its usually too late to start thinking about forming an LLC . . . because liability starts when the injury occurs and forming an LLC is not retroactive. Its like having insurance.

When startign a business, its crucial that you take the necessary steps to protect yourself right up front or as soon as possible. If you havent done it yet, don't delay or procrastinate.

Wise business planning includes the formation of the proper business entity or structure and the purchase of liability or business risk insurance when available. While you cannot eliminate every possible risk when starting a business you can dramatically reduce the likelihood of a devastating lawsuit through proper planning and setting up the proper legal structure like an LLC.

You can learn more about LLCs, liability protection, the best place to set up an LLC, the 4 essential steps to set up an LLC, and much more by getting your free copy of The LLC Guide for Business Owners described below.