The Single Most Effective First Step in Launching Your Small Business: Form a Legal Business Entity

Forming a Legal Business Entity

What's the most important first step to launch a small business? Form an LLC or other legal business entity. Read on to find out why. Image source: Getty Images

Making Your Business Real

Registering your business with your state's Secretary of State office or other business formation authority can feel empowering and inspiring. It gives your business a name that you can put on a website and print on business cards. It helps clarify your sense of purpose and supercharges your motivation -- your business is real now, and you can shout it from the rooftops!

Separation of Business and Personal Finances

Forming an LLC or other entity can create a unique legal identity for your business that is separate from your personal finances. This can help protect your personal assets in case of a lawsuit against your business, and limit your personal exposure to business losses or debts.

Opening a Business Bank Account

Forming a legal business entity can help you open a business bank account. This is an important step in your small business journey, as it gives you a home base for your business income.

Getting Potential Tax Advantages

Setting up a legal business entity makes it easier for you to get the tax benefits of being a small business owner. Talk to an accountant or tax attorney to see how your choice of business entity can affect your personal tax return.