The truth is, you’re a business owner from the moment you decide to place an idea and branding together!
Starting a business doesn’t have to be as complicated as it’s made out to be. Sometimes, the people who know the business, and the aspects of it, pour all of their processes out to people who could care less… this is what makes it complicated.
Don’t do that.
We don’t do that. Unless you really want to know. Then you can’t shut us up!
So this is one of those things, where we felt the need to write about, to answer some of our most common questions about LLC formation.
LLC vs sole proprietor- what makes them similar?
Both an LLC and Sole Proprietor have some of the same structure processes. Deciding on an LLC vs Sole Proprietor depends on how you plan to scale and grow your business.
An LLC and Sole Proprietor can both function under one ownership.
As an LLC and Sole Proprietor, you are taxed under an individual tax liability, unless you opt into functioning under the LLC.
Although having a Sole Proprietor business comes with minimal paperwork, filing a single-member LLC requires minimal setup and paperwork once established as well.
LLC vs sole proprietor- the differences…and there are some big ones!
As with the LLC vs Corporation, the tax election is at the top of our list for differences between an LLC vs Sole Proprietor. As a Sole Proprietor, your business is YOU. You warrant no forms of business exemptions under this entity. This means the money you make is considered your income. As an LLC, based on the amount your business profits or loses, you’re given the option to choose how you would like to explain that to the IRS and trust me, they want to know! Let’s put it this way, as an LLC, you’re able to say that you work for your company. As a Sole Proprietor, you ARE the company!
The great thing about Sole Proprietor is that vs an LLC, you are only taxed one time for the income made. As an LLC you will need to file taxes under the profits of the LLC, as well as on the salary you made on your own personal taxes. This is what leaves a bad taste in the mouths of entrepreneurs. It kinda sucks to have to brew up the business, only to fork over so much to the IRS. However, if you find a great Accountant, you’ll be able to see how to choose the best form of filing.
Protection of assets and liability. While LLC’s provide the protection of not personally being on the hook for business liabilities like a Sole Proprietor business does, it also provides the option for unlimited owners and partnerships. Sole Proprietors do not offer this option, since the owner is the business. Having this form of protection gives business owners the ability to grow without risking their own assets in the event of lawsuits and business losses.
So what will your business need?
I’m sure you know what we would suggest by now, but ultimately, the decision will be based on your individual business needs. Having an LLC serves as your protection umbrella. You don’t need the umbrella all of the time, but at some point, you know it’s going to rain.
Even if you’re not ready to take the LLC steps, filing a simple Trade Name, or Doing Business As (DBA) will at least place your business or brand within the system and possibly provide some form of coverage while performing business searches.
We believe your business deserves better.
Why go through the process of creating and establishing something that you’ll be proud of, without giving it the proper protection? It’s kind of like holding an umbrella with holes in it…
Don’t buy the umbrella with holes in it.
Take a moment to check out what we have to offer… NICE, NEW, BIG UMBRELLAS, also known as LLCs, Corporations and Small Business Outsourcing Services… but we’re ok with whatever you want to call it.
Just Have it!