Bee,

The primary advantage of registering an LLC as opposed to just doing business as a sole proprietor or a general partnership is in the fact that LLC is a legal entity separate from its owners. The name “Limited Liability Company” implies that the company liability does not apply to its owners.

This is what limited liability means: having your business organized as a limited liability entity, such as an LLC, separates your business from your personal assets (real estate, vehicles, etc.) In other words, if your business is sued your personal assets are off limits in case the business looses the law suit.

Keep in mind that different states provide different levels of limited liability protection. Some states such as Delaware, Wyoming or Nevada are famous for being incorporation friendly partially because their laws provide good limited liability protection.