As soon as you start selling something, be it anything from home-made jewelry to data architecture consultation services, you start a business. Some people view the word "business" as implying the presence
of a storefront and employees, but that's not always the case. A business might be a sole proprietorship, in which all of the work is left up to one person, a partnership or LLC, where several people work
together and share input into business decisions and work, or a corporation. One of the biggest differences between a sole proprietorship and a partnership, and an LLC and a corporation is the change in
So what is liability? Having liability means that people (customers, suppliers, employees, random people walking by your store who slip, or anyone else that is adversely affected by your
business) are able to personally sue you, the business owner. By having "liability," you assume the risk of the business. In practical terms, for most people, this can mean that a freak accident taking
place can mean the loss of significant financial assets (read: someone slips on an old banana peel in your company's showroom and you lose your house). LLCs and Corporations relieve that stress, as each
holds what's called "limited liability." In layman's terms, that means that the company and the owner are separate in the eyes of the law, so when someone sues the company, the check doesn't come out of
the owner's pocket. Another difference between types of businesses comes around tax time.