Starting a Business

One of the greatest things about living in the United States is the opportunities available to us to take an idea and to put it into motion by starting our own business. I am going to discuss two different options available in the start of a business. Many people have great and creative ideas, but are terrible business owners. By establishing a business properly, it allows some levels of protection from liability and makes things much easier on the business owner regarding tax reporting. The two business entities discussed are:

Sole Proprietor: A sole proprietorship, also known as the sole trader, individual entrepreneurshipor proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work “alone”—it is possible for the sole trader to employ otherpeople.

Limited Liability Company: A limited liability company is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability ofa corporation. An LLC is not a corporation under state law; it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs are well known for the flexibility that they provide to business owners; depending on thesituation, an LLC may elect to use corporate tax rules instead of being treated as a partnership, and, under certain circumstances, LLCs may be organized as not-for-profit. In certain U.S. states, businesses that provide professional services requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but may be required to form a similar entity called a professional limited liability company.