What is the difference between a limited liability company and a sole proprietorship?

A limited liability company (LLC) and a sole proprietorship are two common business formations in Indiana. The main difference between them is their degree of protection for personal assets. A sole proprietorship is the simplest type of business structure. It is owned and managed by one person, and does not have any legal distinction between the business and the individual. This means that the owner is personally responsible for all debts and obligations of the business. In comparison, a limited liability company is a separate legal entity that provides its members with limited liability protection. This means that the owners of the LLC are not personally liable for certain debts and other obligations of the business. This gives the business owners the benefit of protecting their personal assets from being used to pay off business debts. Additionally, LLCs have the ability to pass through income taxes to the owners, while sole proprietorships must pay income taxes as if it was the business itself. LLCs are also more flexible in terms of management and can incorporate different structures; sole proprietorships have fewer options. Finally, LLCs are generally more expensive to establish and maintain, while sole proprietorships do not have any filing or registration fees. Overall, while both business formations are a popular choice in Indiana, the main difference between an LLC and a sole proprietorship is the degree of protection for personal assets that an LLC offers.

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What is the difference between a limited liability company and a sole proprietorship?

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