Intro:
If you’re starting a business, one of the first decisions you’ll make is how to structure it. Most people choose either a sole proprietorship or a limited liability company (LLC)—but what’s the difference?
Sole Proprietorship – Simple, but Risky
This is the easiest and most common structure. There’s no formal paperwork and you report income on your personal tax return.
🔻 But the downside? You’re personally liable for any business debts or legal issues.
LLC – More Protection, More Professional
An LLC separates your personal and business finances. You get legal protection, potential tax benefits, and better access to funding and partnerships.
💡 Most banks and lenders prefer working with LLCs.
Key Differences at a Glance:
| Feature | Sole Proprietor | LLC |
|---|---|---|
| Legal Protection | ❌ No | ✅ Yes |
| Tax Flexibility | ❌ Limited | ✅ Options (pass-through or S-corp) |
| Setup Difficulty | ✅ Very Easy | ⚠️ Moderate paperwork |
| Business Credibility | ❌ Lower | ✅ Higher |
