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

The main difference between a limited liability company (LLC) and a sole proprietorship is the amount of legal liability each structure carries for its owners. A sole proprietorship is an unincorporated business owned by one individual. The business and the owner are one and the same under the law and the owner is personally liable for all debts and obligations of the business. Any debts or lawsuit brought against the business are the responsibility of the owner. A limited liability company in South Dakota, on the other hand, offers the advantage of limited liability protection for its owners. In an LLC, the business is legally separate from its owners. This means that any debts or liabilities that are incurred by the business are not the responsibility of the owners. The members of an LLC are only liable up to the amount of their investment in the company. In South Dakota, it is relatively easy to set up an LLC. It requires a formation document to be filed with the Secretary of State’s office and it is subject to certain fees. Additionally, LLCs are subject to certain rules and regulations and must comply with annual filing requirements. In summary, the main difference between an LLC and a sole proprietorship is the degree of protection available for the owners. In a sole proprietorship, the business and the owner are one and the same, thus the owner assumes all the business’s legal liabilities. With an LLC, the business and the owner are legally separate, providing limited liability protection for the owners.

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

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