In setting up a small business entity, you have several options: an S- or C-corporation,a"closely- held"S- or C-corporation, anLLC,apartnership, and asole proprietorship.
Let's eliminate the last one right away. In a sole proprietprship, there is no legal difference between your business possessions and your personal possessions. If someone sues your business (even if you operate under a d/b/a (i.e., a different name) and wins (rightly or wrongly), they can come after anything you own, including your home, your car, your savings, your boat, etc. as well as your business equipment or property. On the other hand, if someone sues you personally (for example, if your dog bites them, or they slip & fall on your property) and wins, they can come after any of your business equipment or property as well as your personal stuff. So, a sole proprietorship offers absolutely no protection (and no favorable tax angles, either).
In a partnership, all general partners are liable for all partnership debt. Worse, you are bound and held liable for any contract or deal signed in the name of the partnership by any of the other partners (however hare-brained or unprofitable). Most partnerships ultimately fail, often because one partner gets tired of doing the lion's share of the work while both share profits (or losses) equally. Among those partnerships that succeed, the best are usually those in which one partner does all the work, and the other (often called the "silent partner") provides all the capital-- property, cash, equipment, etc.-- and the partners have a mutually satisfactory written agreement as to who gets what percentage of the profits.
If you choose to set up a corporation, you can choose whether to be taxed at regular corporate rates (a "C-Corp"), or to have flow-through taxation ("S-Corp" or "Subchapter S Corp."). Regular corporations are often said to have "double taxation," because first the IRS taxes any corporate profits, then you also have to pay personal taxes of any salary or distributions which you receive. However, with a subchapter "S" election ("S-corp) filed with the IRS, any profits you keep are taxed just like any other income you receive ("flow-through taxation"), with no separate corporate taxes added on. If you go with a corporation, whether you file an S election with the IRS or not, there is another important option here in Georgia: you can choose to have your attorney file the corporation as a "closely held corporation." (Most online corporation filing companies do not offer this option. This is one example of why you are better off with a competent local attorney who is familiar with your state's laws, rather than a "one-size-fits-all" e-filer who offers to file in any state, and may not know how to customize your filing for your state. Also, some of these outfits actually charge more than a local attorney, and try to get you to buy all kinds of unnecessary add-ons.)
A "closely held corporation" has much easier record-keeping requirements, and is a much better fit with small companies; regular corporate law was written to take care of large companies like Delta, GM, US Steel, etc.. This can become very significant if your corporation is ever sued; in attacking your corporation in court, the other side's attorney may demand corporate records of required annual meetings, lists of officer elections, etc.. Most small businesses do not keep up with all these requirements, and if the other side's attorney can show your corporation has deficiencies in these areas, they can ask the Court to declare "the corporate veil has been pierced," meaning the corporate protection of your personal assets has been destroyed, and they can now go after your personal goods (house, car, savings, etc.) even though it was originally a suit against the corporation. "Closely held" corporate status does away with this danger. If you have a small business, an S-Corp or an LLC taxed the same way as an S-Corp would most likely be best for you, unless you have an unusual tax situation or very high income for a small company. The advice of a good CPA is recommended to find out which would be best for you. Georgia LLCs are quick and simple, and more anonymous, as they are not required to publically list who the officers are annually, as Corporations must. The only possible disadvantage I am aware of, which rarely affects small companies (never, in my practice), is that corporate law has been around for centuries (though updated regularly), and is therefore a somewhat more settled and predictable body of precedent in case of litigation, whereas LLCs are the new kid on the block; some attorneys believe decisions in complex cases may be more fluid and unsettled.
In summary, to have maximum protection of your personal assets, and to have maximum fleibility to keep taxes as low as possible, your small business should be set up as a closely-held corporation or an LLC, most likely with a Subchapter "S" IRS election.
One important warning: be sure that when you set up the corporation or LLC, there is absolutely no crossover between your finances and the business-- have separate checking accounts; do not comingle funds. Do not transfer funds back and forth between business and personal accounts, except for pay checks or distributions from the business to you, and be sure you pay all legitimate business expenses-- and only business expenses-- with business checks. I have had clients who paid their mortgage, their groceries, etc. with company checks or credit cards, or their business expenses with personal credit cards, and the resulting accounting and tax problems can be very difficult (and expensive!) to sort out.