What You Need for an LLC? Sole Proprietorship Overview

A sole proprietorship has a single owner and is easy and affordable to set up with little paperwork. Sole proprietors have complete control but also bear all losses personally.

Pros and Cons of Sole Proprietorship

  • Pros: Complete control and flexibility
  • Cons: Personal liability for debts
  • Tax requirements are simpler
  • No need for an Employer ID number

Setting Up a Sole Proprietorship

  • Sole proprietors run their companies alone, make all decisions, and have low start-up costs.
  • Legal and financial obligations fall directly on the owner.
  • Individuals don’t register with states like LLCs do. They choose a name, get licenses, and start.

Should I start an LLC for my side hustle?

Benefits of an LLC

  • LLCs can choose how they want to be taxed, leading to potential tax advantages.
  • Gain liability protection and credibility.
  • Low filing costs and potential tax write-offs.

Asset Protection and Formality

  • An LLC protects assets if sued.
  • Operating Agreement outlines rules and resolves potential issues.
  • Being an LLC can boost confidence in business dealings.

Conclusion

Starting an LLC offers credibility, asset protection, and potential tax benefits for your side hustle.

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