Many small business owners start with a sole proprietorship keep clear of the costs of forming a corporation or LLC. This is often a wise decision as statistics show that a majority of small businesses throw money away for the first several years. A personal exemption reduces your taxable income so you wind up paying lower taxes. You most likely are even luckier if the exemption brings you using a lower income tax bracket. For the year 2010 it is $3650 per person, identical to last year's amo...