Fiction: The most important consideration when starting a small business is the source of funding.

Fact: Funding your small business venture is certainly important, but there are other things to consider before you get started. Many small business owners aren't aware of the importance of the type of business entity they choose.

Whether you are a start-up or have been in business for years, choosing or changing your business's entity is an important part of the business's financial and overall future. The entity determines the rules that govern the business's formation, operation, taxation, and dissolution. The entity also establishes the degree to which the business and its investors are liable for the acts of an agent of the business. The entity you choose will affect future financial business decisions, such as the need for additional insurance to protect yourself against liability or the decision to sell ownership interests.


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