Sole proprietor vs LLC

rachel hairstylist — Tue, 24 Feb 2026 07:03:30 GMT

What are the pros and cons for choosing to be a sole proprietor vs LLC ?

Re: Sole proprietor vs LLC

MarthaT — Wed, 30 Aug 2023 18:54:33 GMT

Hello and thank you so much for your question. The pros and cons are as follows:

Sole Proprietorship - Is an individual who owns a business but is not a legally separate entity from the business.

Reports income on Form 1040 Schedule C.
It is personal liable for any debts or financial claims against the business.
Pros-Most accessible type of business to start.
Cons-Personally liable for business debts or legal liabilities and Need to pay SE Taxes

Reports income tax on form 1040 Schedule C unless it files Form 8832 and elects to be treated as a Corporation.
It provides the owner with Limited Liability Protection.
Pros-Single-Member LLC are taxed like Sole Prop and it does have the limited liability protection.
Cons-Single-Member LLC owners need to pay Self-employment taxes

I hope this answered your questions. Have a wonderful day