If you own a business you have probably been told to just set up an LLC or Corporation and you are protected. Unfortunately, this strategy may not protect you. In many cases it is most effective to have multiple entities to separate the business from the assets. Yes, you can use an LLC to manage the business but it may be unwise to hold significant assets in the LLC. Really you will need to have at least 2 entities to run a business. This causes more separation and therefore more protection for you and your family.

Simply owning a business can help you save thousands on taxes and help protect what you own. This holds true more most Americans even if they do not have a large business. Home based or asset management businesses can do wonders for your tax bill.

Although every business is different, the general rule of thumb is to have at least two business entities. One to manage the business and one to own the assets of the business.

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Many business owners use the sole proprietorship because it is easy to set up, maintain, and take deductions. Unfortunately, this is where the benefits end.

Basically, if you do not choose a business entity then by default you become a sole proprietor and are limited by the number of deductions you can take. In other words, it is the "bottom of the barrell, " for deductions. At least take a look at other entities like the LLC or Corporation. You might find that you have been missing out on some great tax deductions.

Statistically, by using a sole proprietorship you are ten times more likely to be audited by the IRS. Most likely this is because there are so many more sole proprietors than any other business entity.

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