How Do LLCS Protect Assets?

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Sole Proprietorship vs. LLC

  • A sole proprietorship has one owner. It’s the simplest structure.
  • A limited liability company offers liability protection. Liability is limited to the owner’s investment.

Advantages and Comparison for 2023

  • Both LLCs and sole proprietorships require state filing to be recognized.
  • LLCs offer liability protection but require more paperwork and fees. Sole proprietorships are simpler and cheaper but don’t offer liability protection.

Asset Protection and Taxation

  • An LLC provides asset protection. It is separate from its owners.
  • LLCs allow flexible taxation. Owners can choose pass-through taxes or corporation taxes. Sole proprietors only have pass-through taxes.

Liability Protection and Ownership

  • An LLC is an independent legal entity.
  • A sole proprietorship is owned by one person. It doesn’t have legal distinctions like an LLC.

Conclusion

  • For liability protection or control, an LLC or sole proprietorship may suit you.
  • Some businesses actually suit a sole proprietorship better as an LLC’s costs don’t provide significant benefits.

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