No matter how good your business plan and projections are, there’s always something that makes that first dollar take longer to appear in your deposit slips: that DSL line they installed turns out to be flaky and you have to call the cable company for broadband instead, the guy who said he’d take anything you produce says it’ll be at least 90 days before he can buy, the training took longer than you expected . . . the list is endless. You’ll feel like you’re walking a tightrope.

As a rule of thumb, when your starting a new business, plan for 6 to 12 months of expenses including your own living expenses. If you haven’t already done so, be sure to find other home based business owners or telecommuters and ask them about their start-up experience. If you’re starting up a home-based business, as long as you’re not a potential competitor, fellow entrepreneurs are often very willing to help. You can even go so far as to ask another owner to look at your projections and see what they think. They often will reciprocate and offer to show you theirs. Also track down one or more business associations that you might join. Whether or not you join, the bigger associations are often a goldmine of useful information on topics like: typical financial ratios, vendors, specialized attorneys and accountants, tips and tidbits about how to succeed, etc.

If you have an existing job you can save every penny to build up a war chest for that first year of expenses. If you need to raise money, keep it simple. You don’t want a bunch of angry investors driving you crazy with well-intentioned suggestions (a.k.a. their half-baked, wanna-be ideas) while you’re struggling to make things work. Money from friends, family, and people who know you, like you, or love you, is probably your best bet. After that, assuming you qualify, a loan is your next likely source.

Above all, make sure your credit card debt is under control. And if it is, get a bunch of them and use them all just a little and pay on time every time. Build up the limit on those cards so that if you suddenly find yourself in crunch you have an alternative. But think of it this way, if you’re going to walk out on a tree limb, it’s nice to have another one to hang on to. If you break the limb off to use for balance like a tightrope walker, you can’t lean on it anymore . . . and there’s no net.

If you’re thinking of working as a home-based freelancer or you operate a home-based business, here’s a question you’ll eventually ask yourself: Should I incorporate or remain a sole proprietor?

Well, the primary reason that most small businesses incorporate is to protect the owner(s) from personal liability that might arise from business practices. Let’s say you’re making gift baskets and a customer’s 8 year old drinks the wine it. (Don’t laugh, it can happen.) Good chance you and your business will be sued. If however, you have operated as a corporation, your personal assets should be safe.

If you’re in a business that isn’t a breeding ground for lawsuits, or if you really don’t have much in the way of personal assets that need protecting, you may find the complications of a corporate form outweigh the benefits.

Other factors that weigh on the decision of business form include: taxation, cost, and paperwork.

Here’s some basics about the various business forms.

A sole proprietorship is the most common and easiest business structure. There is no significant cost to start or maintain a sole proprietorship. Paperwork hassles are minimal. And your profits are treated as personal income and filed on your regular personal tax return. On the downside, the owner is fully liable for the actions of the sole proprietorship.

A partnership, which involves two or more people, is more costly to start (since legal documents are involved) and requires more paperwork than a sole proprietorship. Your share of the profits pass through to your personal tax returns just like in a sole proprietorhship. And, unless it’s a limited partnership, you are personally liable for the business of the partnership.

A corporation is a legal entity that is created to conduct business. When properly managed, the corporation is considered separate from those who run it. The cost of forming a corporation ranges from a couple of hundred dollars to thousands of dollars, depending on what State you live in (or incorporate in) and how complex the structure is. S Corporations (short for Subchapter S), a “light” version of the regular corporation, are typically a better bet for small businesses because they avoid double taxation. Instead of paying taxes at the corporate level, and then again at the personal level, the profit of an S Corporation passes through to the owner’s personal taxes. The paperwork involved in properly maintaining a corporation is significant but not insurmountable once you get the hang of it. Producing corporate (as well as personal tax returns) will cost you in accounting fees as well. Your State government will get it’s share of the wealth too. Most states have annual corporate fees, and some are even structured as a percentage of income so be sure to check with your Secretary of State before you make the switch. All told, you can probably figure on paying between $1,000 to $4,000 annually to maintain a simple S corporation.

Finally, a limited liability company (LLC), allows its owners to take advantage of the benefits of both the corporation and partnership form. Profits and losses are taxed at the personal level and the owners are shielded from personal liability.

One final related thought: if your doing your own taxes, you might think about turning that task over to an accountant. Not only can an accountant (not a tax prep company) help you find deductions you might be missing, they also may be able to keep Uncle Sam off your back. Indeed we worked with one that knew his way around because he was a former IRS agent. (His first question to us was, “Do you want to eat well or sleep well?”)

What’s the big deal? Sole proprietorships are the most commonly audited form of business. And owner-prepared returns are audited more than others. Even if you’re doing everything right, audits are costly and time-consuming. A CPA’s signature on your returns is a good insurance policy.