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Running a sole proprietorship? Form an LLC to separate your personal finances and unlock business advantages.¹

A sole proprietorship doesn’t have a formal formation process other than getting a DBA (if you want one), business licenses (if needed), or permits (if your business needs them).
An LLC is a separate legal entity from its owner(s). That means the liabilities and debts of the business are usually separate from those of the business owner, which will protect your personal assets if the business experiences any litigation.
Some of the benefits of an LLC include personal liability protection and tax flexibility. Entities are easy to set up, if you use a formation service provided by a company like ZenBusiness. Forming your business as an LLC can also provide added credibility.
A sole proprietorship’s net business income is taxed at the business owner’s individual income tax rate. For tax purposes, a single-member LLC is a “disregarded entity” and is taxed at the same rate as a sole proprietorship.
Legally, you and your sole proprietorship are considered the same entity. Someone who sues your business is also suing you. That means everything you own – your bank account, home, car, etc. – can be impacted by litigation.
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– Mark Cuban on starting a business
Entrepreneur and Shark Tank host lays out 3 steps to follow when starting a business
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¹If your sole proprietorship has a “doing business as” (DBA) name (also known as a trade name, assumed name, or fictitious name depending on your state), you may not be able to continue using it when you form your LLC. DBA laws vary widely by state. If your state allows DBAs and LLCs to share the same name and your DBA is the same as an existing LLC’s name, you’ll need to find a new name for your LLC before you file your paperwork with the state. No state allows two LLCs to share the same name.