Let’s clear up one of the most common questions I hear from new business owners: “Do I really need to set up an LLC? Or can I just be a sole proprietor?” Here’s the honest, plain-English breakdown:
Sole Proprietorship
*Easiest to start — you are the business.
*No legal separation between your personal and business assets. If something goes wrong, your personal assets (like your house or savings) could be at risk.
*Simple taxes — your business income is reported directly on your personal return.
LLC (Limited Liability Company)
*Legal protection — your business is its own legal entity, so your personal assets are typically shielded.
*More credibility with clients and partners (LLC after your name signals that you’re serious).
*More flexibility down the road— you can elect different tax structures (like an S Corp) as your business grows.
Think of it like this: a sole proprietorship is like running your business out of your backpack, while an LLC gives you a solid briefcase and a lock.
Which one’s right for you?
If you’re just starting out, a sole proprietorship might feel simpler. But if you want liability protection, room to grow, and more options to save on taxes in the future, an LLC can be a smart investment.
At Oak City Accounting, we help business owners weigh these decisions strategically—not just for today, but for the long game. Ready to talk through which structure fits your goals best? Let’s chat.
