When it comes to starting a small business, the two structures most frequently chosen are a Limited Liability Company, commonly referred to as an “LLC” or a sole proprietorship (“SP”). Both offer particular advantages for new entrepreneurs. However, there are distinctions between LLCs and SPs which are important to understand. Below is a shortlist to help guide your decisions on important issues that will impact your small business.
To start, the main distinction between an LLC and SP is that an LLC offers the business owner personal liability protection and a corporate shell to isolate personal assets from the debts of the business. A sole proprietorship offers no such protection, and any financial troubles the company experiences will impact the owner’s personal finances and credit.
Below we’ve listed additional areas where LLCs differ from SPs.
Costs
Regulation
Business Name
Taxes
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