Sole Proprietorship vs LLC
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Sole Proprietorship:
- An unincorporated business with only one owner.
- Personal income tax on profits earned.
- Easy to establish and dismantle due to lack of government involvement.
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LLC (Limited Liability Company):
- Barrier between individual and business, shielding from liability.
- Lawsuits, debts, and liabilities stop at the separate business entity.
- Offers liability protection for owners, tax savings, and management flexibility.
Sole Proprietorship and LLC in Software Companies
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Sole Proprietorship:
- Owned by one person.
- No legal distinction between personal and business assets.
- Simplest and least expensive business structure to form.
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LLC:
- Provides personal liability protection in the software industry.
- Legal entity with own income, assets, and liabilities.
Funding Comparison: Sole Proprietor vs LLC
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Sole Proprietor:
- Reliant on personal resources for capital.
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LLC:
- Allows teaming up with other owners for funding.