💼Starting as a sole proprietorship is often appropriate for very small businesses.
📝Sole proprietorships are the default option and require no additional paperwork or fees.
🏦LLCs can have the same tax status as sole proprietorships, making them a good option for pass-through tax treatment.
💰Forming an LLC involves fees and potential ongoing costs, such as annual filing requirements.
⚖️Sole proprietorships expose the owner to personal liability for business debts and legal issues.
What are the advantages of a sole proprietorship?
—Sole proprietorships are easy to set up, require no additional paperwork or fees, and have the same tax status as an LLC.
What are the advantages of forming an LLC?
—LLCs provide limited liability protection for the owner, have more tax options, and can be advantageous for businesses with significant assets.
Are there additional costs associated with forming an LLC?
—Yes, forming an LLC involves fees and potential ongoing costs, such as annual filing requirements.
Can I start as a sole proprietorship and later convert to an LLC?
—Yes, many businesses start as sole proprietorships and later convert to an LLC as they grow and need additional legal protections.
Which option is best for my one-owner business?
—The best option depends on factors such as personal assets, liability risks, and long-term growth plans. Consulting with a legal professional can help you make an informed decision.
00:00Attorney Elizabeth Weinstein discusses the choice between forming an LLC or operating as a sole proprietorship for one-owner businesses.
01:10Sole proprietorships are the default option for one-owner businesses, requiring no additional paperwork or fees.
03:18Forming an LLC involves fees and potential ongoing costs, such as annual filing requirements.
05:06Sole proprietorships expose the owner to personal liability for business debts and legal issues.
06:27LLCs provide limited liability protection, more tax options, and can be advantageous for businesses with significant assets.
08:04The decision between an LLC and sole proprietorship depends on personal assets, liability risks, and long-term growth plans.
