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SOLE PROPRIETORSHIP

This is the simplest business structure that you can use when starting up your business. It's an unincorporated business which is owned and run by one individual with no distinction between the business and you. You are entitled to all profits and are responsible for all of your business's debts, losses, and liabilities. 

If you choose to operate your business under a different name than your own, you will most likely have to file a fictitious name (also known as an assumed name, trade name, or DBA name, short for "doing business as"). You must choose an original name, one that is not already claimed by another business. This is completed at your local county clerks office.

Pros

  • Easy - A sole proprietorship is the simplest business structure to establish. If you're just using your First & Last name for the business then you may not have to file any additional documentation in order to set up your business. 

  • Control - Since you own 100% of your company, you have complete control over all decisions.

  • Taxes - Your personal & business taxes are filed together making it a very cost effective process. Also, the tax rates are the lowest of the business structures.

Cons

  • Unlimited personal liability - Because there is no legal separation between you and your business, you can be held personally liable for the debts and obligations of the business. If you were to get sued for example, your personal assets could be used to satisfy any judgements made against you.

  • Hard to raise money - Unlike LLC's & corporations you cannot sell stock or a percentage of your business which limits investor opportunity.

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LIMITED LIABILITY COMPANY (LLC)

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