Sole Proprietorship, It’s Implications, & The Solution
If you’re in business for yourself, and you haven’t created a formal business structure, then chances are, you’re already a Sole Proprietor – so make sure you understand the implications!
* Liability –
Sole Proprietors are personally liable for the debits of their business. If the business is sued, your house, savings, and other personal assets are at risk! You may want to consider operating as a Limited Liability Company (LLC) instead, so you are better protected in the event of a legal action.
* Taxes –
A Sole Proprietor is responsible to report all business profits as personal income, and pay self-employment tax on those profits, to cover Medicare and Social Security.
* Capital –
There are no membership interests, shares, or partners in a Sole Proprietor. So, it’s generally difficult to attract investors without changing your structure!
Not to worry, there is a solution… Form an LLC!
What is an LLC?
An LLC stands for a Limited Liability Company. The main reason for forming an LLC – whether you are starting a new business or formalizing an existing one – is to separate your personal affairs from your business.
When done properly, and kept compliant, an LLC means you are not responsible personally for debts or liabilities of your business: invaluable protection. An LLC is also very flexible about who can own and manage the business and how you decide to manage its tax affairs. Most of our customers decide an LLC is the best option for their needs. We can help every step of the way!
Forming an LLC with Prime Corporate Services has never been easier. Request a free consultation with one of our Advisors, and we will make sure you have the right setup for your business!