ForumsStarting a Business

There are a lot of things to consider. The reason why companies choose the LLC entity over a sole proprietor is the limited liability aspect of an LLC. If you ever get sued as an LLC, in most cases, only your business assets are at risk. As a sole proprietor, your business and personal assets are at risk.

But some prefer being a sole proprietor because its the easiest route to forming a business. By just operating your business for profit, you are a sole proprietor. There is no paperwork to file with the state, and no annual fee. You must pay an annual LLC fee (usually about $300) and complete a personal property return in addition to the normal Fed and State filings come tax time if you decide to form an LLC.

Either way, you should purchase business insurance. Forming an LLC does not completely protect your personal assets from a lawsuit. One of the ways the LLC protection can be circumvented is by not purchasing adequate business insurance.