When entrepreneurs get an idea they often go full steam ahead with a no matter what attitude. This is their nature but this approach sometimes becomes detrimental to the long-term stability and operational efficiency of the business. Following these simple suggestions could save a lot of time and money from the get-go. Time and money seem to be two resources that entrepreneurs can ill afforded to waste so I highly recommend giving these suggestions some serious consideration.

• Don't incorporate or form an LLC right away.
  
  I cant tell you how many times I've been hired by a new client who had already formed an entity which turned out to be the wrong choice. The type and legal structure of an business once a business is formed it is often hard and expensive to change. How would you know if the best legal entity is Sole Proprietor, care, “5”, corp, LLC. Partnership, limited partnership etc. Most of the time the entrepreneur takes a CRAP shoot and either incorporates or sets up an LLC, not knowing and/or understanding the potential ratifications
  
  
  
• Consult a CPA before you set anything up.
  
  Many times you might want to simply operate as a sale proprietorship to see if you really have a viable business. If you don't you saved the cost of setting up an entity you have no use for. You will also save yourself the headache of continuous junk mail and government correspondence as well as the ongoing fees and the cost to dissolve the entity.
  
  
  
• Make sure you have a viable business.
  
  Even some of the best ideas don't turn out to be good business models. Just because you may fill a certain need does not automatically qualify it as a business. To be a viable business there has to be a profit potential, otherwise it may turn out to be a "hobby".
  
  If you do have a viable business these are some of your options along with a few pros and cons:
  
  

Entity type	Some Pros	Some Cons
Sole Proprietor	Simple to organize & operate	No legal insulation Limited tax planning options High tax audit risk
Corporation	Insulation from personal legal liability* Flexible ownership options	Double taxation Must document board of directors and shareholder meetings
“S” COPP	No double taxation Insulation from personal legal liability*	Restrictions on type of shareholders allowed Limit on the number of shareholders allowed Must document board of directors and shareholder meetings Profit distributions must be in proportion to ownership percentages
LLC	Insulation from personal legal liability* Ability to set flexible partnership agreement Can elect to be taxed as a corporation or S corporation	Cost more to set up than an a traditional corp. Single owner LLC automatically becomes a “sole proprietor for tax purposes.
LLP	Insulation from personal legal liability* Flexible income, loss and ownership agreements allowed	All profits are subject to self employment tax (Social Security and Medicare tax)
Partnership	Easy to form No set up or annual fees Flexible income, loss and ownership agreements allowed	No personal legal insulation All profits are subject to self employment tax (Social Security and Medicare tax)




*You must maintain the corporation as a separate legal entity meaning that there has to be a board of directors, meetings and decisions need to be documented, etc. A good business attorney should be consulted with respect to maintaining your corporate identity, shareholder and partnership assessments, etc.