Going about setting up a business is not as difficult as it may seem. There are a few basic requirements you need falling into the categories of business structure, registration with government authorities, and permits/licenses.The first issue to decide for setting up a business is structure. Structure means the form of the business, and you can either have a sole proprietorship, partnership, limited liability company (LLC), or corporation. Keep in mind that there is no “correct” answer, and your business structure can change as your business changes. A sole proprietorship is the easiest way to get started; it simply means that the individual is operating the business. The main disadvantage (when setting up a business) of a sole proprietorship is liability. Your businesses liabilities are your personal liabilities, and therefore your personal assets are also susceptible to claim if your business owes money. The main advantage is simplicity in creation, and in taxation.Partnerships are similar to sole proprietorship and taxation. The key thing to remember about partnerships is to have partnership agreements in place. These are written documentations explaining what will happen if a person decides to leave the partnership, how the profit is split up, and other contingencies about various business scenarios.A corporation is a pseudo-person who represents the business. The corporation is headed by a board of directors, and responsible to shareholders. Corporations are governed by the state in which they are created, and there are more complex laws regarding reporting and taxation. You will likely need some expert or lawyer to help you get started with a corporation. For small businesses, an S-Corp is a popular choice as it is a simple form of corporation and profit and loss is passed to the owners.An LLC is a hybrid between a partnership and corporation. Liability is limited, but administration is not as complex as a corporation. Likely, businesses needing liability protection will choose between an S-Corp and LLC. The decision mostly comes down to which is more beneficial for tax purposes, and your taxation situation will vary depending on the state in which you live.The key point regarding liability is that if you have an LLC or corporation, you want to run your business separate from your personal life. If you mix accounts; if you take personal expenses as corporate expenses, and generally mix your actions so that you are running the corporation not as a director, but as your own personal business, you may be endangering your protection. When you act or sign, consider that your actions are on behalf of the corporation, and as a representative of shareholders. This is why liability board meetings, meeting notes, and so on have value as they formalize the actions of the corporation.