Starting a new business requires major effort and involves many decisions. Here are some of the first steps you need to take. Sole proprietor v. separate legal entity Creating a separate limited liability entity makes sense for most entrepreneurs.
Most businesses have liabilities such as leases for space and equipment.
Other substantial liabilities may be created by employee actions or product defects. Additionally, potential customers, financial institutions and investors may be reluctant to do business with a sole proprietor. Each has different requirements, advantages and disadvantages. The entity you choose depends on business needs, tax implications, operating flexibility and long-term goals. Assuming you want to form a separate entity, you also should consider which jurisdiction you want to govern the operation of your company.