One of the first questions every small business owner must consider is whether to operate as a sole-proprietorship or as a corporate entity. Operating as a sole-proprietor costs no money because you don’t have to pay to create legal documents and tax returns. Whether you should continue to operate as a sole-proprietor however depends on your business and personal risk tolerance. Experts recommend setting up a corporation because it gives you some legal protection. You’d be surprised at the liability you can engender when you set yourself up as a business owner. People may come at you with litigation or try to dun you for bills. If nothing else, it protects your personal credit rating.