What is the difference between a sole proprietorship and an LLC?

A sole proprietorship and Limited Liability Corporation (LLC) are two different business formation structures. The main difference between the two is the amount of protection they provide to their owners from legal and financial liabilities. A sole proprietorship is the simplest business structure. This type of business is owned and operated by a single person, and there is no legal distinction between the owner and the business. Because of this, the owner is legally responsible for all of the business’s debts, obligations and liabilities. The owner also has unlimited personal liability for the business’s debts and liabilities. An LLC is a separate legal entity from the owner. This means that the owner is not personally liable for the LLC’s debts and liabilities, and they are not personally responsible for any legal disputes or claims that arise out of the LLC’s business activities. The liability of the LLC is limited to its assets, meaning that the owner’s personal assets are protected in the event of a lawsuit or creditor claim. In addition, an LLC is a more flexible business structure than a sole proprietorship. Owners of LLCs may choose to be taxed as a corporation or a partnership depending on the number of owners in the business. Overall, a LLC provides owners with more protection from legal and financial liabilities than a sole proprietorship does.

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What is the difference between a sole proprietorship and an LLC?

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