{"id":5405,"date":"2022-02-10T12:57:17","date_gmt":"2022-02-10T17:57:17","guid":{"rendered":"https:\/\/falconexpenses.com\/blog\/?p=5405"},"modified":"2023-05-12T18:48:02","modified_gmt":"2023-05-12T22:48:02","slug":"sole-proprietor-vs-single-member-llc","status":"publish","type":"post","link":"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/","title":{"rendered":"LLC vs Sole Proprietorship: The Complete Comparison"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_74 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e0089f42bfa\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e0089f42bfa\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Read_this_article_for_the_complete_comparison_of_an_LLC_vs_Sole_Proprietorship_including_single_member_LLC_Everything_you_need_to_know_before_you_start_your_own_LLC_or_single-member_LLC\" >Read this article for the complete comparison of an LLC vs Sole Proprietorship, including single member LLC. Everything you need to know before you start your own LLC or single-member LLC.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#What_is_a_Sole_Proprietorship\" >What is a Sole Proprietorship?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#What_is_a_Single_Member_LLC\" >What is a Single Member LLC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#LLC_vs_Sole_Proprietorship_Similarities_Differences\" >LLC vs Sole Proprietorship: Similarities &amp; Differences<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Sole_Proprietorship_vs_LLC_Advantages_Disadvantages\" >Sole Proprietorship vs LLC: Advantages &amp; Disadvantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#When_is_it_better_to_be_a_sole_proprietor\" >When is it better to be a sole proprietor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#When_is_it_better_to_be_a_Single-Member_LLC\" >When is it better to be a Single-Member LLC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#How_to_Evaluate_Your_Liability\" >How to Evaluate Your Liability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#LLC_for_Self-Employed\" >LLC for Self-Employed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#How_do_I_start_an_LLC\" >How do I start an LLC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Can_you_have_an_LLC_and_be_a_sole_proprietor\" >Can you have an LLC and be a sole proprietor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Is_it_better_to_have_an_LLC_or_sole_proprietorship\" >Is it better to have an LLC or sole proprietorship?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Do_you_need_an_LLC_to_be_self_employed\" >Do you need an LLC to be self employed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Is_a_single_member_LLC_an_independent_contractor\" >Is a single member LLC an independent contractor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/falconexpenses.com\/blog\/sole-proprietor-vs-single-member-llc\/#Conclusion_LLC_vs_Sole_Proprietorship\" >Conclusion: LLC vs Sole Proprietorship<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 8<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>\n<h2 class=\"wp-block-heading\" id=\"read-this-article-for-the-complete-comparison-of-a-sole-proprietor-vs-single-member-llc-everything-you-need-to-know-before-you-start-your-own-single-member-llc\"><span class=\"ez-toc-section\" id=\"Read_this_article_for_the_complete_comparison_of_an_LLC_vs_Sole_Proprietorship_including_single_member_LLC_Everything_you_need_to_know_before_you_start_your_own_LLC_or_single-member_LLC\"><\/span>Read this article for the complete comparison of an LLC vs Sole Proprietorship, including single member LLC. Everything you need to know before you start your own LLC or single-member LLC.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image alignwide size-full\"><a href=\"https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2022\/02\/sole-proprietorship-vs-single-member-llc.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"563\" src=\"https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2022\/02\/sole-proprietorship-vs-single-member-llc.png\" alt=\"Sole Proprietorship vs Single Member LLC: The Complete Comparison\" class=\"wp-image-5415\" srcset=\"https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2022\/02\/sole-proprietorship-vs-single-member-llc.png 1000w, https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2022\/02\/sole-proprietorship-vs-single-member-llc-300x169.png 300w, https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2022\/02\/sole-proprietorship-vs-single-member-llc-768x432.png 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/a><figcaption class=\"wp-element-caption\">Learn about the comparison of a LLC vs sole proprietorship. Read below to learn.<\/figcaption><\/figure>\n\n\n\n<p>As a self-employed sole proprietor you\u2019ve probably asked yourself, should I form an LLC? You\u2019re probably wondering what\u2019s the difference between a sole proprietor vs single-member LLC. This is especially true if your business is growing. As your business grows it is natural for you to ponder questions about what is the best way to support your business and most importantly your customers.&nbsp;<\/p>\n\n\n\n<p>However, even if you\u2019re a self-employed sole proprietor with a business that isn\u2019t rapidly growing you might be wondering if it\u2019s in your best interest for your business to form an LLC. A single-member LLC to be specific. This might be true even if you\u2019ve been operating it for a while and have a steady income stream.<\/p>\n\n\n\n<p>In this article, we compare a sole proprietorship to an LLC. This article provides the most thorough and complete comparison of a LLC vs sole proprietorship on the web. We go over everything that you need to know, in detail. Such as the advantages and disadvantages of both. Our goal is to help you evaluate what is best for you and your business. However, we do have our opinions, and in our opinion, we think it is better for all sole proprietors to take the leap and start their own LLC.<\/p>\n\n\n\n<p>Read on to learn about the comparison of a sole proprietor vs single-member LLC.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-a-sole-proprietorship\"><span class=\"ez-toc-section\" id=\"What_is_a_Sole_Proprietorship\"><\/span>What is a Sole Proprietorship?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A <a href=\"https:\/\/falconexpenses.com\/blog\/what-is-a-sole-proprietor\/\">sole proprietorship<\/a> is a business owned and run by one person where there\u2019s no distinction between the owner and the business. Sole proprietorships are considered informal businesses that are not formal, legal, business entities.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-a-single-member-llc\"><span class=\"ez-toc-section\" id=\"What_is_a_Single_Member_LLC\"><\/span>What is a Single Member LLC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A single-member LLC is a term used for an LLC with only one owner. LLC is the acronym for Limited Liability Company, and sometimes single-member LLC is abbreviated as SMLLC. Owners of LLCs are called members. A Limited Liability Company with more than one member is known as an LLC or an LP. LP is the acronym for Limited Partnership.&nbsp;<\/p>\n\n\n\n<p>Single-member LLCs are formal legal business entities.&nbsp;<\/p>\n\n\n\n<p>What does \u201cformal legal business entity\u201d mean?<\/p>\n\n\n\n<p>A formal legal entity is any company or organization that has legal rights and responsibilities, including tax filings. In addition, a legal entity, such as a single-member LLC, can enter into contracts and can be sued or sued in a court of law.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-is-an-llc\">What is an LLC?<\/h3>\n\n\n\n<p>An LLC is a Limited Liability Company. An LLC is a formal legal business entity; therefore, it must be registered with the state where it is formed.&nbsp;<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sole-proprietor-vs-single-member-llc-similarities-differences\"><span class=\"ez-toc-section\" id=\"LLC_vs_Sole_Proprietorship_Similarities_Differences\"><\/span>LLC vs Sole Proprietorship: Similarities &amp; Differences<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In this section, we go over some of the similarities and differences between an LLC vs sole proprietorship. However, it isn\u2019t until the next section that we go over the advantages and disadvantages of the two different business entities.&nbsp;<\/p>\n\n\n\n<p>So keep reading!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"sole-proprietor-vs-llc-differences\">Sole Proprietor vs LLC Differences<\/h3>\n\n\n\n<p>We wouldn\u2019t be presenting you with the option of forming a single-member LLC if there weren\u2019t differences from your existing business operations as a sole proprietor. So here they are.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"liability-protection\">Liability Protection&nbsp;<\/h4>\n\n\n\n<p>A single-member LLC provides you with personal liability protection in the event of any wrongdoing. For example, if wrongdoing is committed by you or the employees of your LLC, you are personally protected, and your assets are personally protected, from the cost of the resulting damages.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"brand-name\">Brand Name<\/h4>\n\n\n\n<p>When you\u2019re a sole proprietor your business name is typically their surname unless they register as DBA (doing business as). When you\u2019re an LLC owner you can pick a legal name for your business and this can be any brand name that you choose. A brand name will make you look more professional and give you credibility.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"registration-and-maintenance-costs\">Registration and Maintenance Costs<\/h4>\n\n\n\n<p>LLCs cost money to register and maintain, while sole proprietorships do not cost any money to register or maintain. However, you register an LLC with the state of your choice, and some states have very low registration and maintenance costs. Read on to learn which states are the cheapest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"sole-proprietor-vs-llc-similarities\">Sole Proprietor vs LLC Similarities<\/h3>\n\n\n\n<p>There are a few similarities that a sole proprietorship and a single-member LLC share. Read below for the similarities.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"pass-through-taxation\">Pass-Through Taxation<\/h4>\n\n\n\n<p>The benefit of pass-through taxation is to not pay taxes twice. Paying taxes twice is also known as double taxation. With pass-through taxation, the income your business earns, whether you\u2019re a sole proprietor or an LLC, \u201cpasses through\u201d to your income.&nbsp;<\/p>\n\n\n\n<p>This means you don\u2019t pay business tax on the income your business makes, and then tax a second on your personal income you pay yourself from your business profits. Hence, the reason it is called \u201cpass-through\u201d&#8211;the business&#8217;s income passes through directly to the owner.&nbsp;<\/p>\n\n\n\n<p>In the United States, 95% of businesses are pass-through businesses. The reason for this has to do with the benefits of pass-through taxation. Both LLCs and sole proprietors enjoy the advantages of pass-through taxation.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"employer-identification-number-ein\">Employer Identification Number (EIN)<\/h4>\n\n\n\n<p>An EIN is required for Sole Proprietors and LLCs to <a href=\"https:\/\/falconexpenses.com\/blog\/how-to-open-a-small-business-bank-account\/\">open a business bank account<\/a> or hire employees.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"payroll-tax-withholding\">Payroll Tax Withholding<\/h4>\n\n\n\n<p>This only applies if you have employees. Both LLCs and sole proprietors have to withhold payroll tax if they have employees.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sole-proprietor-vs-single-member-llc-advantages-disadvantages\"><span class=\"ez-toc-section\" id=\"Sole_Proprietorship_vs_LLC_Advantages_Disadvantages\"><\/span>Sole Proprietorship vs LLC: Advantages &amp; Disadvantages<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"sole-proprietorship-advantages\">Sole Proprietorship Advantages<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"no-upfront-costs\">No Upfront Costs<\/h4>\n\n\n\n<p>We only see one advantage to operating as a sole proprietorship. That advantage is that there are no upfront costs. Truth be told, to start an LLC you have to pay for formation costs. However, these costs can vary a lot from state to state, with some states being very cheap. For example, at the writing of this article, the cost to <a href=\"https:\/\/falconexpenses.com\/blog\/wyoming-llc-benefits\/\" target=\"_blank\" rel=\"noreferrer noopener\">form an LLC in Wyoming<\/a> is only $100.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"single-member-llc-advantages\">LLC Advantages<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"personal-liability-protection\">Personal Liability Protection<\/h4>\n\n\n\n<p>As the name says, LLCs limit their owner&#8217;s liability.&nbsp;<\/p>\n\n\n\n<p>What does this mean for you as the owner of a single-member LLC?<\/p>\n\n\n\n<p>This means that your personal assets, such as your car, bank account, house, etc., are protected if your business is sued or defaulted on debt.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"tax-benefits\">Tax Benefits<\/h4>\n\n\n\n<p>As a single-member LLC, you have options to customize your tax structure. Therefore, you can choose what tax strategy is best for your business and business or personal circumstances. Consult a Certified Public Accountant (CPA) to determine what tax strategy is best for your LLC.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"growth-potential\">Growth Potential<\/h4>\n\n\n\n<p>As a single-member LLC, you can grow your revenues, profits, and risk without personal risk. This is because of the personal liability protection provided by LLCs.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"trust-and-credibility\">Trust and Credibility<\/h4>\n\n\n\n<p>Banks and customers tend to trust LLCs, including single-member LLCs, more than information business structures such as a sole proprietorship.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"sole-proprietorship-disadvantages\">Sole Proprietorship Disadvantages<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"no-personal-liability-protection\">No Personal Liability Protection<\/h4>\n\n\n\n<p>As a sole proprietor your personal assets, such as your car, bank account, or house are at risk in the event your business is sued. This also includes if your business defaults on its debt.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"fewer-tax-benefits\">Fewer Tax Benefits<\/h4>\n\n\n\n<p>As a sole proprietor, you pay taxes on your profits; you also pay full <a href=\"https:\/\/falconexpenses.com\/blog\/what-is-self-employment-tax\/\">FICA taxes<\/a> (Medicare and Social Security tax). For a profitable business, this is expensive.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"growth-potential-limited\">Growth Potential Limited<\/h4>\n\n\n\n<p>As a sole proprietor, your risks increase as your business becomes more profitable. Increased profit and risk mean a need for a formal legal business entity. For example, do you own a car, a house, or other assets? If you answered yes, keep reading.<\/p>\n\n\n\n<p>As your business grows your risks of being sued grow. An upset customer sues you. Whatever the reason, if you\u2019re sued, and you own assets, or have a lot of money in your personal bank account, those assets could be taken from you as part of the lawsuit.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"less-credible\">Less Credible<\/h4>\n\n\n\n<p>Sole proprietors don\u2019t have the same branding opportunities provided by a single-member LLC (or other formal business entity). This often results in less credibility. When a sole proprietor invoices, opens a business bank account, receives payment, or does any kind of marketing, they must use their surname. The only exception to this is if the state where you operate as sole proprietor allows you to register as doing business as (DBA) name.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"single-member-llc-disadvantages\">LLC Disadvantages<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"upfront-cost-and-maintenance\">Upfront Cost and Maintenance<\/h4>\n\n\n\n<p>The cost of forming an LLC is only a few bucks in some states, with the registration cost in Wyoming being a mere $100. However, for some, this might be a lot so we thought we would add it here. However, we do feel that the advantages of an LLC far outweigh operating as a sole proprietor. <\/p>\n\n\n\n<p>In addition, for some, it might feel like there is extra complexity when it comes tax time and with the annual maintenance fee processing. However, this is not different than all the new things you had to get acquainted with to be a sole proprietor. Therefore, as you know from experience, over time you learn, and it becomes easy. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"when-is-it-better-to-be-a-sole-proprietor\"><span class=\"ez-toc-section\" id=\"When_is_it_better_to_be_a_sole_proprietor\"><\/span>When is it better to be a sole proprietor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>We feel every sole proprietor should form a single-member LLC. However, there are some cases where it\u2019s probably better to stick to being a sole proprietor.<\/p>\n\n\n\n<p>So when is it best to stay a sole proprietor?<\/p>\n\n\n\n<p>Sole proprietorship is best for small businesses with these attributes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your business is low-profit<\/li>\n\n\n\n<li>Your business is low risk<\/li>\n\n\n\n<li>You have a few customers (i.e. friends and neighbors)<\/li>\n\n\n\n<li>Your business is also a hobby (i.e. blogging, photography, etc.)<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"when-is-it-better-to-be-a-single-member-llc\"><span class=\"ez-toc-section\" id=\"When_is_it_better_to_be_a_Single-Member_LLC\"><\/span>When is it better to be a Single-Member LLC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>We recommend that nearly all sole proprietors form an LLC. With that said, these are the attributes of a business that most certainly should form an LLC.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your business has a lot of customers<\/li>\n\n\n\n<li>Your business has an extra risk of liability or loss<\/li>\n\n\n\n<li>You would benefit from unique tax options<\/li>\n\n\n\n<li>Your business has the potential for immediate and sustainable profit<\/li>\n<\/ul>\n\n\n\n<p>Are you ready to form an LLC?<br>Check out these guides for a complete overview of the two lowest-cost states where you can form an LLC.<br><br><strong><a href=\"https:\/\/falconexpenses.com\/blog\/wyoming-llc-benefits\/\">Wyoming Single-Member LLC: A Complete Guide<\/a><\/strong><br><strong><a href=\"https:\/\/falconexpenses.com\/blog\/delaware-llc-benefits\/\">Delaware Single-Member LLC: A Complete Guide<\/a><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-to-evaluate-your-liability\"><span class=\"ez-toc-section\" id=\"How_to_Evaluate_Your_Liability\"><\/span>How to Evaluate Your Liability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>At the end of the day, it\u2019s a personal decision whether or not you form a single-member LLC. However, in this section, we want to provide you with some perspective to help you think through the concept of liability. Therefore, you can evaluate for yourself how liability plays into your decision to form an LLC or not. With that said, our advice is to consult a lawyer if you\u2019re interested in going really deep on this topic.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"llc-for-self-employed\"><span class=\"ez-toc-section\" id=\"LLC_for_Self-Employed\"><\/span>LLC for Self-Employed<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Self-employed individuals can form an LLC. In this article, we provided everything needed for self-employed individuals to evaluate whether or not to form an LLC.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-do-i-start-an-llc\"><span class=\"ez-toc-section\" id=\"How_do_I_start_an_LLC\"><\/span>How do I start an LLC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Starting an LLC is easy. Follow these simple steps to start your single-member LLC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-1-pick-a-name-for-your-llc\">Step 1: Pick a name for your LLC<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-2-choose-a-state-for-your-llc\">Step 2: Choose a state for your LLC<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-3-choose-a-registered-agent\">Step 3: Choose a registered agent<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-4-file-you-articles-of-organization\">Step 4: File your Articles of Organization<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-5-create-an-operating-agreement\">Step 5: Create an Operating Agreement<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"step-6-get-an-ein\">Step 6: Get an EIN<\/h3>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"frequently-asked-questions\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"can-you-have-an-llc-and-be-a-sole-proprietor\"><span class=\"ez-toc-section\" id=\"Can_you_have_an_LLC_and_be_a_sole_proprietor\"><\/span>Can you have an LLC and be a sole proprietor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>By definition, a Limited Liability Company, including a single-member LLC, cannot be a sole proprietor. As a sole proprietor, you own and operate your own business. However, a sole proprietorship is not a corporation.&nbsp;<\/p>\n\n\n\n<p>A Limited Liability Company is a business and a legal entity. To be more specific, an LLC is not a corporation and it is not a sole proprietorship. Therefore, you cannot have an LLC and be a sole proprietor for the same business.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"is-it-better-to-have-an-llc-or-sole-proprietorship\"><span class=\"ez-toc-section\" id=\"Is_it_better_to_have_an_LLC_or_sole_proprietorship\"><\/span>Is it better to have an LLC or sole proprietorship?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you ask us, we think it is much better to have an LLC, even if you\u2019re a solopreneur. The benefits far outweigh the disadvantages. You get liability protection from an LLC, so if you own an asset, such as a car, none of your customers or vendors can sue you and get it. In addition, get to take advantage of the perks of a custom-crafted brand. Having your own brand adds credibility and professionalism to your business.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"do-you-need-an-llc-to-be-self-employed\"><span class=\"ez-toc-section\" id=\"Do_you_need_an_LLC_to_be_self_employed\"><\/span>Do you need an LLC to be self employed?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You are not required to have an LLC to be self-employed. You can work as a sole proprietor if you\u2019re self-employed. Read this article for the advantages and disadvantages of a sole proprietorship vs single-member LLC to help you decide. Personally, we feel all self-employed individuals, with few exceptions, should form a single-member LLC.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"is-a-single-member-llc-an-independent-contractor\"><span class=\"ez-toc-section\" id=\"Is_a_single_member_LLC_an_independent_contractor\"><\/span>Is a single member LLC an independent contractor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An independent contractor can form a single-member LLC that they own and run as a one-owner business.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"conclusion-sole-proprietor-vs-single-member-llc\"><span class=\"ez-toc-section\" id=\"Conclusion_LLC_vs_Sole_Proprietorship\"><\/span>Conclusion: LLC vs Sole Proprietorship<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>We think that the advantages of an LLC far outweigh the disadvantages and that every self-employed individual should form one. Hopefully, this guide was helpful in your evaluation of a sole proprietor vs a single-member LLC.<\/p>\n\n\n\n<p>We would love to hear your story, and so would our readers, about why you created a single-member LLC? Or why you stayed as a sole proprietor.<\/p>\n\n\n\n<p>We are a community of small business owners that love to share and help each other.&nbsp;<\/p>\n\n\n\n<p>So don&#8217;t hesitate to share your story in the comments or reach out to us at <a href=\"mailto:support@falconexpenses.com\" target=\"_blank\" rel=\"noreferrer noopener\">support@falconexpenses.com<\/a>, and we could even feature your story on our blog.&nbsp;<\/p>\n\n\n\n<p>Thanks for reading and leave any questions you have in the comments.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 8<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>Read this article for the complete comparison of an LLC vs Sole Proprietorship, including single member LLC. Everything you need&#46;&#46;&#46;<!-- AddThis Advanced Settings generic via filter on wp_trim_excerpt --><!-- AddThis Share Buttons generic via filter on wp_trim_excerpt --><\/p>\n","protected":false},"author":20,"featured_media":5415,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3340,1974,2874],"tags":[2879,34,2922,2646,29,2920,2921,1832,1830,2923],"class_list":["post-5405","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-llc","category-self-employed","category-small-business","tag-dba","tag-independent-contractor","tag-limited-liability-company","tag-llc","tag-self-employed","tag-single-member-llc-2","tag-smllc","tag-sole-proprietor","tag-sole-proprietorship","tag-wyoming-llc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/posts\/5405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/comments?post=5405"}],"version-history":[{"count":3,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/posts\/5405\/revisions"}],"predecessor-version":[{"id":5981,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/posts\/5405\/revisions\/5981"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/media\/5415"}],"wp:attachment":[{"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/media?parent=5405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/categories?post=5405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/falconexpenses.com\/blog\/wp-json\/wp\/v2\/tags?post=5405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}