As everybody knows, some of the strongest investing you can do is in real estate. People always need a place to live, and that bubble which keeps threatening to burst never quite does. So once you've gotten into the market, what's a good way to protect your hard won investments?

The small business owner would do well to know about the strongest tools available to shield him or her from personal liability; namely, incorporating. By forming a corporation, you create a separate legal entity and limit your own, personal liability. Incorporating comes in many forms: the S-corporation, C-corporation and the newest way to do business in the U.S., the LLC.

If you operate a sole proprietorship or are partners with another person and are brought to court, you may not realize that you're risking all you have. The reason being, if you lose the case, a judge can order you to pay a settlement. Every single personal asset can be sold to satisfy that judgment, including your family home, any retirement accounts, even money you've squirreled away to pay for college. Before you incorporate, your liability is unlimited.

Once you incorporate, if a suit is brought against your company, they will sue the corporation and not you personally. If the corporation has to pay off a settlement, it, not you, will be required to liquidate whatever assets it owns. So maybe the factory won't be safe, but your house will be.

If you're interested in forming a new business entity, talk to your legal and tax professionals. Both corporations and LLCs require work and set up fees, but can save you a great deal at the back end. The entity you choose will depend on a number of specific considerations, including tax consequences, the nature of your particular business and its management structure, among other features.

Once you decide to incorporate or form an LLC, you need to file the correct legal paperwork with the Secretary of State and make sure you follow the regulations specific to the state where you'll be incorporating. You can either do this on your own or use a professional self-help website like LegalZoom. With LegalZoom, simply answer an online questionnaire and you can create accurate, completely customized documents.

LegalZoom is not a lawfirm and can only provide self-help services at your specific direction. Information contained above is subject to change and is not applicable to every state. Visit LegalZoom.com for specific state-by state-documents.

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