A sole proprietor is the easiest type of structure, but again it doesn`t offer you any protection from lawsuits, or losses. As a sole proprietor, your EIN ( is your social security number, per say). So let`s say you want to fund your business and the only way to do it is if you take out a personal loan, this loan is attached to your credit. Meaning you are 100% liable for that loan and if you don`t pay it on time or don`t pay it at all, guess what? You used your FICO to get the loan now your FICO score is down the drains...
As a Limited Liability Corporation, well you have the same benefits as a Corporation, and it`s the newest and most sough, type of structure when conducting business.
Here is why:
1. You separate your Personal from your Business expenses (credit, Credit Cards, Loans, Car Leases, Office Leases, and much more)
2. You can deduct everything as a loss, or break even at the end of the year.
3. In an event of a Lawsuit, you are protected (As long as stay compliant)
4. The company has it`s own EIN (Establish Corporate Credit)
Should I go on?
Web Developer / Owner / Consultant
When starting your own business the need to "know-how" is greater than money!