When you started your business, you were operating out of your spare bedroom and had no more than a shoestring budget, at best. Things have taken off better than you ever expected, however, and you’re expanding.
Could it be time to change from a sole proprietorship to a limited liability corporation?
What’s the difference between a sole proprietorship and an LLC?
Essentially, sole proprietorships are considered indivisible from their owner-operators. You are your business. Accordingly, you have all the tax and legal liabilities that your business has.
By comparison, an LLC is considered a distinct legal entity from its owners. Your debts and your business debts are two different things. If your business faces a lawsuit, your assets are protected.
Many people think that you must have partners to form an LLC, but LLCs are commonly owned by single members. Having an LLC can, however, make it easier for you to add partners into the fold at a later time.
Is it difficult to change your sole proprietorship to an LLC?
Generally, it’s cheaper and easier to form an LLC than any other type of business entity. Many people feel that they combine the best aspects of a partnership or sole proprietorship with the best aspects of a corporation.
You will need legal guidance on your road to establishing an LLC. You must make sure that your business name is available to be registered, that your articles of organization are compliant with state and local laws, your bank account is correctly established and your operating agreement is correct.
If you’re ready to learn more about forming a business entity, get started the right way. Speak to an experienced attorney today about your options.