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Incorporating your business is the process of establishing it as an entity separate from you as a person. As a corporation, your business gains certain benefits, including legal protections and potential tax benefits. From a branding perspective, incorporating your business may help build trust and credibility among prospective customers and clients.

When incorporating a business, you decide how to structure it — as a partnership, limited liability company (LLC), C corporation, or S corporation. If you are your business (you’re self-employed), your business is considered to be a sole proprietorship, and you stand to miss out on the benefits provided to corporations.

Choosing the right corporation type now can prevent headaches and hassles later, but you can change your business structure at any time. For my first business, a wholesale hair-tie company, I started as a sole proprietor. But when I started working with larger retailers such as Zazzle and Sephora, I decided to switch to an LLC to reduce my exposure to financial risk in case someone decided to take legal action against me for some reason.

In the following sections, I weigh the pros and cons of each type of business entity.