What Is an LLC License?

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Sole Proprietorship

A sole proprietorship has an owner. Many businesses are sole proprietorships. They suit owners, contractors, and consultants. Know the pros and cons to run one effectively.

  • The most disadvantage is no liability protection. Every liability becomes a personal liability. While owners have control and flexibility, they also have complete personal liability.
  • Setting up a sole proprietorship is easy and affordable. Little paperwork is required. You can start offering services immediately. Licenses or permits may be needed but that’s generally it.
  • Sole proprietors run their companies alone. They make all decisions. This business structure has low start-up costs and financial risk. There’s no distinction between the business and its owner. Legal and financial obligations fall directly on the owner.

LLC for Side Hustle

Should I start an LLC for my side hustle?

  • The cost to file an LLC is low. The fees are $40-$500. You also need a registered agent and physical address which can add costs. These are tax write offs.
  • An LLC protects your assets if sued. That includes bank accounts, houses, and cars. An Operating Agreement outlines the LLC’s rules. Doing this helps resolve issues if they come up.
  • An LLC means someone can only go after the LLC for assets if sued, not your personal finances. So, starting an LLC is an affordable option to protect your side hustle legally.

Pros and Cons of LLC

What are the pros and cons of LLC?

  • LLCs aren’t required to have income or post profits. LLCs can choose how they want to be taxed. Taxes can be lower because of this. There is also a management structure you can choose. Credibility is gained by a formal business. You get liability protection with an LLC. Being an LLC can boost your confidence when doing business.
  • The cost to file an LLC is low. The fees are $40-$500. There are operating fees too though. You will need a registered agent and physical address if starting an LLC. These can add costs too but all costs are tax write offs.
  • With an LLC for your side gig, you get credibility and are taken more seriously. An LLC means someone can only go after the LLC for assets if sued, not your personal finances. The flexibility and lower taxes are benefits of an LLC too.

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