As soon as you sell something or engage in any type of value exchange you are in business. Really, it is that easy to be in business for yourself – as yourself. Even when you work at a regular 9-5 job you are doing business as an entity, namely yourself, with another entity – your employeer.
Most of the time this is ok, but when you decide to develop a business with a larger scope you might want to rethink doing business as yourself. In most countries you have the right to create and own another type of entity (a legal term) through which you do business. Instead of doing business as yourself, you may create or buy a business entity. Essentially, this is a legal entity (like you are a legal entity) that you as a person own.
Setting up a business entity has one key advantage: your business becomes different from you. This has implications. For instance, your business follows different rules when being taxed. Legally, when your business gets in trouble your business takes responsibility for any legal missteps. This means that if your business gets into trouble and payment is order by the court to settle a dispute your own personal assets are not at risk. People only will have a right to damages from the entity that they did business with (your business entity and not you).
So, for anyone out there that is doing non-trivial business, especially one that poses some risk, take some time to investigate the legal business entities that are available in your jurisdiction. Consult a lawyer as well with all issues like this.
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