Business is difficult, and legal compliance doesn’t make it any easier. However, contracts are something you have to get use to as a business owner. There are many things that you can walk yourself through, particularly on the compliance side, as there are state agencies that make proactive efforts to help you meet regulatory obligations. However, contracts are an area where you are set out in the woods on your own.
1. What is the difference between a sole proprietor and LLC?
A sole proprietor in the eyes of the law makes a person a business. Any name you give the business is considered as you doing business as that name. In the distant past the benefit of sole proprietorship over other forms is that business profit is taxed as your personal income; whereas, with a corporation, it is taxed as the corporation’s income and then pays out to you as the owner, who is then taxed again. Sole proprietorships also do not require any paperwork. You just start doing business, though you do need to file for an assumed name certificate if you are using another name than your own and will have to deal with appropriate sales tax issues, etc. The major downside to a sole proprietorship is unlimited personal liability. If your business has a contract dispute or a tort claim against it, you are liable and your personal assets are reachable. When you have co-owners or business partners in a sole proprietorship, it becomes a partnership instead, which is an identical form, but more complicated and sometimes more regulated due to the additional owners.