When starting a small business, one of the most important initial decisions to make is how to legally structure the company. With the exception of one category, starting a small business is like having a child – an entirely new entity is created, separate and distinct from the parent(s) who gave birth to it. It has its own unique life, its own personality and even its own SSN-like identification.
While there are endless ways to structure a new company, small businesses generally fall into one of three categories – a sole proprietorship, an LLC, or limited liability corporation, or a corporation.
Sole Proprietorships is Easy, But Offers Little Personal Protection
A sole proprietorship is just what it sounds like – a company owned and run by exactly one individual. The biggest advantage of a sole proprietorship is that it’s extremely simple to start and to maintain. There are no forms to fill out and file and no fees to pay.
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