What's the Difference Between an LLC and a Sole Proprietorship?

When it comes to starting a business, deciding how to structure that business is important to its future success. While there are several types of business structures, the most common are the Sole Proprietorship and the Limited Liability Company (LLC).

Most people start their business as a sole proprietorship because that’s easier, but the longevity of your business could usually benefit from creating an LLC.

Here are some of the biggest differences between the two:

Sole Proprietorship

• Is operated by one person who has complete control of the business

• The owner is fully liable for all debts and losses

• The owner does not have to share profits 

•  Allows individuals to conduct business without formal organization

• Limited options for taxation

Limited Liability Company (LLC)

• LLCs can be owned and operated by a single individual or by a group, known as members or managers

• Members of an LLC are not held personally liable for business debts and losses

• Requires filing a Certificate of Formation with the Secretary of State of Texas

•  Can choose to be taxed as a sole proprietorship or as an S-Corp.

To determine the best structure for your business, it’s important to discuss your plans with an experienced attorney. Book a consultation with The Law Office of Katherine Kim, PLLC by calling 214-814-5123 or by emailing admin@katherinekimlaw.com!