Business Structure : Sole Proprietorship vs LLC
The first thing you need to decide is your business structure. 72% of all businesses in the U.S. are sole proprietorship. It is simple to form a sole proprietorship. You do not need to register, and it is easier to manage and file taxes. However, your personal assets are not protected from business liability. To learn more about starting a sole proprietorship in Pennsylvania, check out our complete guide.
A second common type of business is a Limited Liability Company (LLC). Although single-member LLCs are considered as a sole proprietorship for tax purposes, LLC is a separate entity. In other words, your assets are protected under an LLC.
How to Decide?
We advise our clients to start a sole proprietorship if they are testing the waters and not sure about the future of their business or keeping their day jobs and looking to make some extra money. However, if you want to protect your personal assets from business liability, and want to grow your company in the long-term then you should opt for an LLC.
What are the other options?
You can also start an S or C corp. However, these corporations are a little more difficult to manage and complicated in terms of taxes. If you want to learn more about business structures, head to our guide.