Sole Proprietor or LLC?

I'm going to be straight forward on this one. If you are planning to start a business or already have one, go LLC or go home. Why do I say this? Only because it makes more sense to do business as a entity such as a LLC. No offense to you or anyone you may know that is operating as a sole proprietor. This is just my personal opinion, in which I will spend the next few paragraphs defending.

So, what does LLC stand for and what does it mean to you? Alot if you are or plan to become self employed. LLC is an acronym for the words Limited Liability Company, and that's exactly what it does. A company that limits your (the owner's) liability in case of any unfortunate events that may occur as a result of doing business. Who wouldn't want that? I mean, no one goes into business expecting these kinds of things to happen, but in everything there's risks, and as a smart business owner you'll want to limit risk as much as possible.

Doing business as a LLC will provide you with a level of confidence and comfort knowing that you have an added layer of protection. Not to mention the fact that your business isn't considered to be a real business unless you operate as a LLC or a Corporation. Don't believe me? Go and try to get a business loan with your personal info. Better yet, apply for a business line of credit and see where that gets you. Even if you are one of the very few people in the country who has an excellent credit score, it's just too risky to carry your business on your personal credentials. A LLC enables you to build business credit, which also increases the value of your business if you ever decide to sell it. Also, it makes it much more easy to apply and aqcuire wholesale accounts from suppliers.

When I formed Core Temperature LLC, I had confidence when applying for accounts, because I knew that my company would be respected. Not saying that your business isn't respected as a sole proprietorship, it's just that when you spend time and money to form a LLC, it says to your peers, lenders, potential partners and competitors that you mean business. Do yourself a favor the next you come across a business or investment magazine, and take a good look at the types of entities those companies do business as and you'll see what I mean.

Thanks for taking time out of your busy day to read my thoughts. I hope you have found this to be helpfull. If you are still unsure if LLC's are your cup of tea, I suggest you do some further research. Barnes and Noble has a selection of books discussing the ins and outs of LLC's. You should start there. Look for publications by Nolo, that's where I started. I'll explain how to form a LLC online in my next post.