Although its perfectly reasonable to do business as a sole proprietor, if you’re setting up your own business you might consider setting up an LLC to provide you an extra layer of protection. As this article from NuWire Investor states among other advantages:
- an LLC is easy to set up, relatively inexpensive
- offers protection from certain types of debt and liability
- is easy to transfer (once you make it big), and
- offers tax “pass through” on various expenses that your company incurs.
Additionally, LLCs give you more credibility when dealing with customers. Who would you rather deal with, John Smith, independent entrepreneur, or Smith Global Enterprises, LLC?
Most secretary of state websites let you set up LLCs easily. Please see your accountant for details about how the tax pass through works for your situation.