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

A sole proprietorship is the simplest and most common form of business ownership in Washington. It involves one individual owner who is solely responsible for all assets, liabilities, and operations of the business. A sole proprietor has the ability to make decisions, control operations, and keep all profits. The primary downside of a sole proprietorship is that the owner is personally liable for all the debts and liabilities of the business. An LLC (Limited Liability Company) is a business structure in Washington that combines the advantages of both a sole proprietorship and a corporation. An LLC legally separates the business from its owners, which gives the owners “limited liability” protection. This means that the owners of the LLC are not personally liable for any debts or liabilities incurred by the company. Additionally, profits and losses of the LLC can be passed onto the owners, and can be taxed more favorably than a sole proprietor. The primary difference between a sole proprietorship and an LLC is the level of protection each offers its owners. A sole proprietorship puts the owner’s personal assets at risk if the business runs into financial difficulties. An LLC protects the owner’s personal assets, as they are legally separated from the LLC and not liable for any business debts or liabilities.

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

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