Single Member LLC vs Sole Proprietorship: Pros, Cons & FAQ

[@rainandcm1]

I like the way you explain. You talk slow enough for me to follow your thoughts. Thank you so much!

[@Hall]

Ryan Zhang, Thank you for your kind comments.

[@tjbamisile8536]

See this is how you explain a question!!!! I subscribed because this is exactly how someone should educate, and not belittle a person because they want to make sure they are doing everything correct! Thank you for taking the time!!

[@Hall]

It’s encouraging to hear that these videos are helpful. Thank you for your kind note.

[@denniseckert8162]

Thanks for clearly explaining this. I just liked, subscribed, and selected the bell notification.

[@Hall]

That is great to hear. Thank you.

[@vicmo25]

This is the calmest video I've ever seen

[@Hall]

That is great to hear. Thanks for your kind note.

[@ThePresentTimeNow]

Thank you for this explanation! Straight to the point and easy to follow. I had an LLC, but I’m back to Sole Proprietorship. Best decision I could make right now!

[@Hall]

Welcome to the Now, thanks for your kind words. Much appreciated!

[@SkyCandyVisuals]

Was that hard to switch? Did I just waste a bunch of money I didn't need to spend? 😅

[@3fishermans]

I agree with many positive comments below. Thank you so much for talking slowly and clearly to explain the differences between those! Super helpful!!

[@Hall]

Glad it was helpful! Thanks for your encouraging note.

[@jessicaw5258]

Great video Aaron!! You were very clear to understand. Making this process easier for me

[@Hall]

j wachuku, that is great to hear. Thanks for the encouragement.

[@winterspringstudios]

Very helpful video Aaron. Your examples made understanding SMLLC vs Sole Proprietorship very easy. Thanks for sharing.

[@Hall]

Thank you, Winterspring Studios. Feel free to ask (here) if you have any questions.

[@winterspringstudios]

@@Hall Would your example of an employee vs owner liability for negligence apply the same if I subcontract a freelancer? In other words does the LLC protect me in a similar way if my subcontractor spills coffee on a baby?

[@Hall]

@@winterspringstudios Yes. Your business provides a liability shield for the negligence of both your company's employees and independent contractors equally.

[@winterspringstudios]

@@Hall Thanks again. If you ever have questions about video production (my field of work) I’d be happy to answer them.

[@josevalles3950]

Hi Aaron, thank you for clarifying how a single-member LLC protects you. I do have a follow-up question. What can you do as an only employee for your company to protect your assets besides be careful and have insurance? I ask to see if I can justify keeping the LLC formation over staying as a sole proprietor.

[@Hall]

Jose, great question. I can’t think of anything else you can do to protect yourself.

[@vineelp]

very well explained. looking forward for more videos

[@Hall]

Thanks for your encouraging note.

[@solbeautyilluminates]

Hi Atty. Hall, your video has helped me in understanding the difference between LLC and Sole Proprietorship. I started a small online drop-shipping business as an LLC this month and wanted to change it to a Sole Proprietorship but I already registered it to the IRS as an LLC. I tried to call the IRS to change it and assign me a Sole Proprietorship EIN but no one answered. I've searched online how to file a form to change the LLC to a Single Proprietorship but there are no forms for it, what do I need to do? Should I register my business name again as a Sole Proprietorship to the IRS to get EIN? Then disregard and never use the LLC EIN I just registered this October 17? Thank you for your time in responding to my inquiry.

[@ironmenconstruction]

Thank you for the video: question , I’m a roofing contractor, my usually I sign all contracts even though the salesman sell the project. Should the salesman be the ones signing? Or me ? To be clear, if I sign do I make myself liable?

[@Hall]

In most circumstances , the company should sign the contract. This is done by an employee of the company. In the United States, as a general rule, it doesn’t matter who signs a contract as long as the signature is as an agent/employee of the company. In other words, the company is signing, but since the company is not a human, a human is signing on behalf of the company.

[@64CyberHacker]

Hey Aaron, thank you very much for extremely thorough video. After days of research, I was reluctantly about to pull the trigger and register as an LLC. With your points however, I have realized there is likely no need for me to, and a Sole Proprietorship should suffice. I am 20 years old starting a business venture doing simple mowing and lawn trimmings, apart from working on a farm to help make ends meet. I would like to expand down the road, but at this time I plan on being the only employee of my company, with the occasional help from a friend. If you could reflect some insight on my personal situation, that would be be deeply appreciated. This is all foreign to me, but I am enrolled in college for a business degree, and am trying to grasp how it all meshes together legally. I don't want to be the guy with no qualifications running through people's yards with spinning blades and constant hazards without being an actual business. Thank you!

[@Hall]

There is a lot of information online pushing people to get business entities, so companies can sell their services. I’m happy to hear this video has provided you some additional information to consider. Based only on the information you provided here, I don’t see a compelling reason to get a business entity. However, I always recommend people consult with a professional about their specific circumstances instead of relying on educational information online. Please keep in mind that this video is generic and educational: it does not take into consideration your specific circumstances and your local laws.

[@SkyCandyVisuals]

Wow so I just spent all day filling out forms for an EIN, CERTIFICATION OF FORMATION, INSURANCE etc so I could get a business bank account because these are the things my bank requires to open a LLC business acnt. But what if I had told the Bank I'm a sole proprietor and I need a business account? Would they have allowed me to open a biz bank account with simply having an EIN? The $250 registered agent fee and $310 filing fee to the secretary of state for filing for formation were they even necessary if I'm just a one man band technician going to customer locations installing/repairing hvac? I'm curious😅 should I be looking into switching my LLC to a S.P. ? Or is it too late now that I have filed? 😅 I like your simple to understand teaching. Definitely subscribed and plan to learn more on these similar topics. Thanks for your help🙌🙌

[@Hall]

Glad it was helpful! Thanks for your kind note. Here is a potentially helpful resource: aaronhall.com/llc-vs-s-corporation-which-one-should-i-get/

[@iamsosasmama]

Thanks for this information. Which would be more appropriate if you are looking to register a business that is to be run by you and your spouse, but doing other multiple businesses?

[@Hall]

I appreciate your message. Thank you. Here is a potentially helpful resource: aaronhall.com/should-my-spouse-and-i-own-an-llc-together

[@racheldesir6612]

Very helpful and to the point. Thank You Aaron!

[@Hall]

Thank you, Rachel. I appreciate the encouraging words.

[@jayh3283]

That's good to know. A single member LLC is only good when you have employees, otherwise it's useless. That really changed my mind on getting one. I see myself starting off as a sole proprietor before switching to an LLC or S Corp if business becomes successful. Thank you.

[@Hall]

Thanks for your comment. To clarify, there can be benefits to a single member LLC when you don’t have employees. For example, if you have contractors working for your business, an LLC can avoid your personal liability for the contractors’ actions. And the LLC can sign contracts for which you would not be personally liable (unless you sign a personal guarantee). But as you alluded to, a sole proprietorship is a simple way to get started and is less hassle.

[@juneyang-8263]

Hi. Last year, I formed JCBUYHOUSES, LLC. This year, I don't want to buy houses anymore. But, I will be buying mortgage notes going forward. Would you recommend filing a DBA with the state of MN? If so, when it's time to renew my entity, do I renew my JCBUYHOUSES, LLC, or both the llc and the DBA name?

[@Hall]

Thank you for sharing your question. I will add this to my list of potential topics to address in future videos.

[@flossyline3]

Thanks a lot for this video. I'm trying to start online medical scrubs retail business . I'm confused. If I should register as a single llc or sole proprietorship

[@Hall]

Thank you for sharing your thoughts.

[@andrewmiller4753]

Great video - thank you. What are your thoughts on a single baker (wedding cakes, birthday cakes, cupcakes etc. working from home and/or rental kitchens) with no employees?

[@tonyqu4765]

Hello Aaron, I have a restaurant open in my own building, Should I create LLC for my restaurant or LLC for my building? Thanks

[@Hall]

Tony, the general rule is you should at least have a business entity (LLC or corporation) for your business operations that could result in a lawsuit. This suggests that you at least should consider an LLC for your restaurant. You might also want an LLC to own your building, rather than owning it directly under your name. These are good issues to discuss with an attorney in your area. What is best for you very much depends on your individual circumstances and risks.

[@tonyqu4765]

@@Hall Thank you very much for your reply

[@javiersein-e8x]

Thinking to get a ATM Business and Vending Machine (snacks, sodas). This business including contracts to get my machines on their business owner locations. Will be better to start Sole Propietor or starts a LLC?

[@Hall]

Thank you for sharing your thoughts. Here is a potentially helpful resource: aaronhall.com/llc-vs-s-corporation-which-one-should-i-get/

[@joseberrios6107]

I'm looking into doing Hotshot Trucking but I will be the only one doing it do I have to get an LLC

[@Hall]

I appreciate your message. Thank you. Here is a potentially helpful resource: aaronhall.com/what-is-an-llc-breaking-down-business-structures/

[@rubixlighting1057]

Thanks for the video. Would you be able to offer my insight on choosing a single member LLC versus sole proprietorship in my case? I’m starting an automotive at home business customizing vehicle’s tail lights and head lights (installing LED lights, replacing brake lights for LEDs). I am unsure of the legality of so. Would an an LLC help me if a customer were to get into an accident and blame it on my products? Thanks.

[@Hall]

Based on just the information here, it appears an LLC could provide you with valuable liability protection. Of course, every situation is different, and this is merely an educational KZbin channel. So don’t rely on just this. You would be best served by getting advice from a local attorney who can take the time to fully understand your circumstances and goals.

[@DanP2525]

Hello sir, wondering which would best on a 1099 trucking job? I’m thinking llc but I’m not sure if I’m doing the driving and can be sued if something happened then sole proprietorship is just as good. I don’t want someone coming after my home and stuff and I eventually want own a truck and operate a one person trucking business so I’m leaning toward llc.

[@Hall]

Most people start with a sole proprietorship and then move to an LLC after they have built up some assets. Whether that is appropriate for you would be best determined by an attorney in your state who can take the time to understand your circumstances.

[@bonteg3848]

Thank you very much for your video and examples. Is there a reason to form a single member LLC for a sole proprietor physician who works with an already established Telemedicine company as a contractor? I cannot see a benefit to it as this is a different situation from the Lawyer example you gave

[@Hall]

I don't see a benefit to an LLC in these circumstances, but it is certainly possible there are benefits because we have not examined all the details of the situation. This is where a local attorney can help you. You might explore with your attorney whether you can use an S Corp to save money on payroll tax. Learn more at kzbin.info/www/bejne/r4KchmdmiZmhm9U

[@pedromartineznavarro6990]

Would you recommend forming an LLC if you are importing products from another country and selling them online with a private label? If someone were to get injured using one of the products I sell, would the liability be on the OEM or myself?

[@Hall]

Hi Pedro, The "limited liability shield" of an LLC or corporation would provide valuable protection to the personal assets of a business owner. For example, if a product is defectively manufactured, all the companies involved in the chain of distribution would be exposed to liability. In such a scenario, an LLC or corporation would usually provide a "limited liability shield" protecting the property and assets of the individuals who own those companies. If you are operating a sole proprietorship, your personal property and assets are exposed to risk. Of course, as with all educational information online, please use this general information to spot issues to discuss with an attorney who understands your particular circumstances. Please don't rely on this general information without consulting with a licensed lawyer in your area. -Aaron

[@Tek41318]

I am starting to get more clients as a photographer and wasn't sure if I should have an LLC filed. I do have a very minimal contract that I have clients sign, but my main concern is if someone were to get hurt during a session. A lot of my clients like to do outdoor shoots on hiking trails, would I be liable if someone were to fall and get hurt?

[@Hall]

Hi Taylor. Usually, I have advised photographers that they do not need an LLC to limit their liability because they have personal liability whenever they are involved with a photo shoot. However, there can be exceptions. For your circumstances, it is best to consult with an attorney who can take the time to understand your risks contrasted with the time and cost involved with maintaining a business entity.

[@officialloveleealston]

This was perfect!!! Thank you so much!!!

[@Hall]

Kisha Love Lee, thank you for your kind words. Feel free to ask if you have any questions.

[@thadude9850]

Is a permit to sell Good enough for a Sole Proprietorship selling Food under a business name I created ?

[@Hall]

Tha Dude, no, it’s not enough. For example, if you want to use a business name in Minnesota, you need to register an “assumed name“ with the Minnesota secretary of state. Each state has an office that handles “assumed name” or DBA registrations.

[@thadude9850]

Aaron Hall, Attorney thanks! 🙌🏽

[@Treadstone-nu8bn]

Would sports trainers or fitness trainers working for themselves benefit more from an llc? For example training for track and field? It is possible that an athlete can be injured during training. Would an llc protect me being that I work alone? I do appreciate the info and will greatly appreciate your feedback. This is the best type of information, the useful type. Thanks

[@Hall]

Hi Treadstone. Great question. Here is a video response for you: kzbin.info/www/bejne/eYaYq4ubepKhaK8

[@alanlee6676]

thanks for the clarification!

[@Hall]

That is great to hear. Thank you.

[@truthhunterministries1361]

Good day Sir, I'm trying to figure out if I should go llc or sole proprietor to start a pressure washing business in Arkansas. I would be the owner and only employee.

[@Hall]

Usually, an LLC is the best option because it is the safest option. You can normally create an LLC for simply a government filing fee. But as always, I encourage you to consult with an attorney in your state for your specific circumstances.

[@Kaelzlove]

Can you file taxes with 1099 instead of having to get an llc? What’s the difference? This is my first year as a small business owner and I want to wait to get my llc until next year but what do you think it’s best?

[@kathyluciana8667]

how LLC with a single member is it still worth it? is that the same as a sole proprietorship

[@Hall]

A single-member LLC gives the owner limited liability. That limited liability shield is the key benefit.

[@kathyluciana8667]

@@Hall Thank you for answering me, So is it possible to set up LLC single-member and chose to be taxable as an S Corporation? I have 2 real estate properties that were bought under my name and at this time I would like to set up a business LLC single-member and put those properties under that LLC single-member since I have no one to be with me on the LLC and planning to chose to be taxable as S Corp does that make sense to you? I appreciate our response Thank you

[@havendays2384]

@@kathyluciana8667 An LLC can be taxed as an S Corp, but that is usually not recommended for LLCs owning rental property. I recommend you speak with a CPA in your state regarding your situation and ways to reduce tax liability.

[@ramibeatz1]

Thank you for this

[@Hall]

That is great to hear. Thank you for your kind feedback.

[@cyriloboh3198]

Informative Video, Thanks

[@Hall]

Thank you, Cyril.

[@itslizzzgarcia8787]

Great video.

[@Hall]

Thank you for your kind feedback.

[@cyriloboh3198]

how would i know if am LLC S =corp, LLC C= corp or a single member LLC

[@Hall]

Great question. Here is the answer: If your LLC has one owner, it is taxed as a sole proprietorship unless you file an IRS form to treat your LLC as a C Corp or S Corp. If your LLC has two or more owners, it is taxed as a partnership unless you file an IRS form to treat your LLC as a C Corp or S Corp.

[@cyriloboh3198]

@@Hall Thank you, here's another question, I have not file tax since I started my agency in 2013 because i wasn't doing anything with it, but when i finally started operation in 2017 i wasn't making anything i mean no customer for at least a year and half but i was making expenses e.g cost of rent, utility e.t.c That's a little of my back story. What do i do since am planning on filling this year? can i claim lost on past years?. Thanks

[@Hall]

Hi @@cyriloboh3198. I wish I could answer your question. However, you would be best served by asking a licensed CPA in your state/area. Your situation is complicated enough that it would probably be a good investment to get this sort of professional help from a CPA you can have a long term relationship with.

[@cyriloboh3198]

@@Hall Thank you very much, you have most helpful.

[@krisjones5735]

Starting my own pressure washing company. Doing residential exterior home cleaning only. It will just be me and a helper. I will be operating from home using my own equipment. Do you recommend sole proprietor or LLC and should I do and S-Corp classification? Also my Insurance agent is asking for a company set up. What is your recommendations? What do you recommend that will be better for me, and for my business tax bracet starting off?

[@Hall]

Whenever you have people working with you, having an LLC or Corporation will provide additional protection for you in case your workers cause damages to others. I recommend you find a CPA to determine whether your financial circumstances justify electing to be taxed as an S corporation. As a rule of thumb, if the business is not generating more than $50,000 per year for you, it probably isn’t worth having an S corporation election.

[@srds5696]

Hello Aaron. I own a single member LLC, (server and bartenders staffing company) I am starting a new business venture that it is not related with my current llc,(post construction cleaning) Should I form a new LLC or sole proprietorship or should I get a DBA with my current company? Can I use my current EIN for my new business?

[@Hall]

SR DS , that is a great question. There are many things to consider. I will do my next video on that question. Feel free to subscribe to get notified when it comes out.

[@Hall]

Here is the response to your question: Should You Create a Second LLC or Use a DBA? kzbin.info/www/bejne/m4XTc2hretOeaas

[@TRIGGAMAN_LOCO]

Bro why a baby lmao. Coulda been an adult just as easy😂😂

[@Hall]

@@TRIGGAMAN_LOCO Hahah. True. Maybe I should tone it down next time I teach that. 😀

[@TRIGGAMAN_LOCO]

@ replying to a 5 year old video is commendable! I just watched like 10 of your videos. Thanks for the advice!

[@novaholive1290]

He is one in a million, best among many, most trusted , I almost gave up on trading then I met him through a friend, Austin is the most trusted trading expert who helped the life of my family and I ,

[@novaholive1290]

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