If you operate your small business as a sole proprietorship, you may have thought about forming an LLC to protect your assets. Like corporate shareholders, LLC owners (or members) generally aren’t liable for the debts of the business except to the extent of their investments. So their personal assets are protected from the entity’s creditors. Plus, partnership earnings aren’t subject to an entity-level tax. Instead, they “flow through” to the owners (in proportion to their interests), are reported on the owners’ individual returns and taxed only once. To the extent the income passed through to you is qualified business income, you can claim the pass-through deduction, subject to limitations.