In this month’s article, we discuss Forming an LLC vs Sole Proprietorship. Selecting a business establishment structure for your company is one of the most imperative, as well as potentially perplexed decisions you will make a small business owner. Unless you work in the accounting field or have extensive knowledge on the intricacies of taxes, it can me difficult to comprehend the specific differences between forming an LLC versus a Sole Proprietorship. However, how you choose to establish your company will impact the amount of taxes that you pay as well as the amount of time that you spend filling out and filing your paperwork, and how you are protected in the event that you are being sued.
What is a Sole Proprietorship and What Are its Advantages?
There are multiple advantages of filing your business as a sole proprietorship, however it might now be the best position for many entrepreneurs. A Sole Proprietorship is less difficult to establish, it is a uncomplicated process and requires less procedural components than additional entities, such as corporations. Specifically, single-person business will profit from the advantages of sole proprietorship, especially if their business is not in need of complicated legal or financial establishment. Some of the popular advantages of filing as a Sole Proprietorship include the following:
- Less paperwork to begin.
- Less difficult processes and fewer needs for business taxes.
- Lower level of registration fees.
- Less complicated banking practices.
- Less complex business ownership.
What is an LLC. Entity and What Are its Advantages?
A lot of new start-ups business decide to be structured as limited liability companies (LLCs), which provide important advantages over many other business entities. As an LLC, your company will benefit from many advantages that a sole proprietorship or corporation will receive, without some of the disadvantages these entities offer. Some of the popular advantages of filing as an LLC. include the following:
- Limited liability: Members aren’t personally liable for actions of the company.
- Make Your Own Decisions: As an individual member LLC, you will have the power to form your own personal business decisions, without being required to consult with your business partners or board of directors.
- Pass-through federal taxation on profits: LLC is a pass-through entity, which means your income will go directly to its members without being taxed by the government on the company level. Alternatively, members pay tax on the profits on their own federal income tax returns.
Nevada Small Business Consulting offers services to assist in all aspects of how to setup an LLC in Nevada, we will make sure that you have all of the necessary paperwork filed with the state where your business is located. We will ensure that you adhere to all of the rules and procedures of your specific state. Contact us today at (702) 758-4691 to schedule a no-cost initial consultation and learn more about the services we can provide for your business.
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