Sole Proprietor is a simple way to operate a business, however, there is no separation between you personally and your business entity.
The main reason to set up an LLC (or an S-Corp, C-Corp) is to add a layer of protection between you and your business.
If a lawsuit is filed against your business and you're a sole proprietor you will be personally liable for damages.
If you set up an LLC or corporation and run it properly (don't commingle personal finances with business finances) then only the business entity would be liable in the event that damages were awarded in a lawsuit.
For a practical example, if a bride trips over her dress, falls down a flight of stairs and her newly wed lawyer husband sues you, they would be able to go after your business assets but not your personal finances and property(like your house).
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|10-17-2019 06:35 AM|
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