1. Most businesses form an entity to limit their liabilities. So you want to separate yourself from your business. Should something go wrong, should someone sue your business, your business would be held separate from your personal life. So, liability is reason number one.
2. You gain tax advantages. Companies are able to write off certain things that individuals may not be able to write off and amortize. For tax purposes, it might benefit you to form an entity and run your operation as a company.
3. It just gives your business a professional image overall. When you are first starting out, and it’s just you, acting as a company could make you appear more serious and established than if you just operate as an individual.
4. Partnerships! You may plan to start the business with someone else, or maybe you will be partnering with someone in the future, or you expect to attract investors who will get a stake in your company. When you are dealing with an entity, it is very easy to assign shares of your company to somebody else. So, should you sell it, or should your partner want to exit or maybe sell their share to somebody else, it’s much easier to do when you are dealing with a company than when you are dealing with a business, which is in just an individual’s name. If you are starting this business with a partner, it might be better to form an entity and outline your percentages, responsibilities, and liabilities between you and your partners.