Page 75 - 597 Business Ideas You can Start from Home - doing what you LOVE! (Beginner Internet Marketing Series)

Step 4. Understa nd Legal Issues 65

income and losses on personal tax returns and is personally liable for
any business-related obligations, such as debts or court judgments .

Sole proprietorships and partnerships make sense in a business
where personal liability isn't a big worry-for example, a small ser­
vice business in which you are unlikely to be sued and for which
you won't be borrowing much money for inventory or other costs.

Partnership (Beware)

A partnership is simply a business owned by two or more people
who haven't filed papers to become a corporation or a limited liabil­
ity company (LLC). You don't have to file any paperwork to form a
partnership. The arrangement begins as soon as you start a business
with another person. As in a sole proprietorship, the partnership's
owners pay taxes on their shares of the business income on their
personal tax returns and they are each personally liable for the
entire amount of any business debts and claims.

If you choose this option, be sure you completely trust your poten­

tial partners . You are, quite literally, trusting your partner(s) with your
business life. Partnerships are easy to form but can be nightmares to
dissolve. Think hard about partnerships and define them clearly in
writing. Consider who's doing what-both now and down the road.

If they can

50 tt/Ut fOU!

Surprised and thrilled by the emotional reaction his cakes brought
to people, attorney Warren Brown real ized he had something spe­
cial. He began moonlig hting fro m his law practice (litigating health­
care fraud on behalf ofthe federal government) and started baki n g
cakes from scratch. In 2000, when he cou ld no longer juggle both
commitments, he took the leap and gave up law. Warren Brown
is now the host of Sugar Rush o n the Food Network, and he also
owns Cakelove and Love Cafe i n Washi ngto n , D.C.