Sole Proprietorship Vs. Limited Liability Corporation
A limited liability company, or corporation, (LLC) is a unique type of entity that combines the personal asset protection of a corporation with the operational flexibility received of operating a partnership. A sole proprietorship consists of a single person who acts as the owner of the business.
Other People Are Reading
-
Formation
-
An LLC must file paperwork with the state in order to form the company. Sole proprietorships automatically begin when a person decides to go into business. A sole proprietor does not have to file documents with a government agency as a condition of operating the business.
Liability
-
Sole proprietors are responsible on a personal level for all debts and liabilities that occur while operating the business. Owners of an LLC are held liable for the company's debts only up to the extent of their investment in the company.
-
Tax
-
An LLC may elect classification as a corporation, which means the company will pay taxes as a business. Sole proprietorships do not pay taxes as a business. Instead, sole proprietors pass business losses and profits directly on their personal tax return.
Decisions
-
Sole proprietors are responsible for making decisions over every aspect of the business. An LLC may have many other owners who will help make important business decisions. Sole proprietors do not have to vote to make decisions for the company, while many LLCs must vote in order to make business decisions.
-
