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If you're in business for yourself, there are numerous benefits to forming a corporation or limited liability company. A key reason is to protect your personal assets in case of a lawsuit. Operating as a sole proprietor puts your personal assets at risk, but forming a corporation or LLC creates a separation between business debts and personal property, providing peace of mind. Additionally, corporations and LLCs offer tax flexibility and potential savings not available to sole proprietors. For instance, electing S-corporation status can provide tax advantages.