benefits of llc vs sole proprietor

Benefits of LLC vs Sole Proprietor

Benefits of Having an LLC vs Sole Proprietor as a Small Business!

As I’m always trying to find the topics that would help small business owners and flourish their businesses, I recently came across a social media debate on the benefits of LLC vs Sole Proprietor, which one of these is better for small business owners?  

Going through people’s opinions on this, I concluded it’s super important that someone finally addresses every aspect of this debate and pretty obviously, that someone is gonna be me! So, this is what we are gonna talk about today: the benefits of LLC vs Sole Proprietor!

 

First off, let’s just get to know about both of these terms separately:

What is LLC?

The acronym LLC stands for Limited Liability Company. It is a business structure designed for small business owners to offer them protection and prevent them from being held personally responsible for debts or liabilities.

Business owners choose LLC as it offers them several advantages, such as:

1. Limited Amount of Paperwork

For businesses that are running on small-scale, excessive paperwork and never-ending formalities are a nightmare! LLC offers less paperwork as well as fewer formalities. For instance, if you have started an LLC, you do not have to attend annual shareholder meetings.

2. Flexible Management

With LLC, owners are entitled to make all their decisions by themselves unlike in a corporate structure where a board of directors is needed to supervise all the important decisions and company policies.

3. Offers Owner Protection

One of the major advantages of LLC is that it offers the separation of business assets from the personal assets of the owner. In the case of debts and liabilities, the personal assets of the owners are always out of risk. If you own cars, houses, etc, this is important!

There are some more advantages of LLC, all concluding to the fact that LLC is one of the simplest business structures. Therefore, it is highly suitable for small businesses.

Coming onto the next one:

What is a Sole Proprietor?

One of the simplest structures followed for a business is the sole proprietorship. As it is the easiest business structure, it is the most common choice for small business owners. In a sole proprietorship, the business is owned by a single individual and there is no distinction between the personal and business debts and liabilities. People go for sole proprietorship because of certain advantages that it offers such as:

1. Low Cost

Setting up a business is expensive enough already. Sole proprietorship is preferred by small business owners as it is inexpensive and the easiest as well as the quickest method to get your business running.

2. More Freedom

Since you are the only owner of your business, you are free to make all of your decisions. You don’t need to consult anyone or take anyone else’s opinions, you may do whatever you believe is in the best interest of your business.

3. Reduced Formalities

As the owner and the business are not viewed as distinct from each other, the formalities of running the business are greatly reduced.

 

Looking at the advantages of both LLC and Sole Proprietor surely makes sole proprietorship look more appealing due to its informality. But let’s compare both of them in detail to know more!

Is LLC better than Sole Proprietorship?

Some of the major differences between LLC and Sole Proprietorship are as follows:

  1. LLC is a formal legal process whereas sole proprietorship does not require any formalities and is easier to form.
  2. In an LLC, the ownership of your business is shared with the members of the LLC whereas you are the only owner of your business in a sole proprietorship.
  3. In case of the business being sued, your personal assets are always safe with an LLC. However, if you are the sole proprietor, your personal assets are just as much at risk as your company.
  4. The taxation process in LLC is kind of flexible which is not the case in a sole proprietorship. If you go with an LLC, you may end up with some tax savings.

All things considered, I personally feel that if you compare the benefits of llc vs sole proprietor, LLC is a better option than sole proprietorship for small-scale businesses. Even though it involves comparatively more formalities, it also has greater advantages and fewer drawbacks. That is why I applied for my LLC when I first started my business back in 2018 (yes – AMCX Studio is an LLC!). All in all, it was a fairly easy process and the yearly fees are minimal when it comes to the protection that I am afforded each year. 

For more information, I would highly recommend that you check with your state requirements for your business. You can oftentimes find state funded business resource centers in your area with a quick google search. I hope this was enough to clear any doubts in your minds and get you thinking about setting your business in stone! Let me know what you prefer, LLC or Sole Proprietorship? You can also check out my other post on Starting a Crafts Business!

benefits of LLC vs Sole Proprietor
DIY hobbies that make money

DIY Hobbies that make money: Start a business online

DIY Hobbies that make money and help you start a business online!

Can I start a business with my DIY Hobbies?

One of the biggest perks of owning a craft machine is the ability to turn your DIY Hobbies that make money into a business! Even if you have a job outside, being able to bring a small stream of revenue can be a huge advantage. This is money that you can use to pay off debts (hello student loans!), build a nest egg of savings, or simply just splurge on yourself without feeling guilty. 

So, if you’re one of those who have some ideas regarding DIY hobbies that make money. This one is for you. There are countless platforms that you can sell on to start building your empire, but in this article, we are going to go over the popular handmade platform – Etsy.

Why sell on Etsy?

Etsy, as mentioned early, is one of the oldest handmade platforms. Over the years thousands of shops have opened up. According to Etsy in their 2020 wrap-up, there were over 3.7 million shops on Etsy! Now you might be wondering with MILLIONS of shops already opened, is that marketplace too saturated? Will I be able to create an income stable enough to kiss my 9-5 goodbye? How will I stand out in an ocean of other shops? Those are all very justified questions, however, that same year data shows that Etsy also had over 69.6 MILLION customers! That is a lot of bodies searching for handmade goods. 

 In recent years, Etsy has started running more promotions, creating commercials, TV shows, and pushing ads to bring in additional customers, spreading the knowledge and reach of this handmade platform. So what does that mean for you? Well, it shows that Etsy is dedicated to making their platform the biggest it’s ever been! When you make money, Etsy makes money, so their focus will continue to be growth in the future. 

What can I sell on Etsy?

You can sell anything on Etsy that you make! We each have a unique gift and style that someone somewhere in the world is going to LOVE. Selling on Etsy will give you access to those people who are looking for and will appreciate your talent. While we all might be using the same SVG files, using the same brand shirts or faux leather, and using the same craft machine, we can all find our spot in the Etsy community. 

One of the biggest things that will set you apart from Sally Cricut is that you are you. Not only will your skill and craftsmanship stand out against hers, but your customer service will be totally different! Your customers will grow to love YOU and how you handle your business. The way you display your products, how you set your shop up, write your descriptions, will all be a representation of who you are, and while some copy, no one can replace YOU! 

Finding Your Niche?

While you play with your machine, think of the projects that you love creating the most and really think about what you can put into your shop. If you can’t pick a favorite project, no worries! You can build your shop in a way that will allow all of your interest to flow until you are able to hone in on what you really want to do or what your shoppers are most looking for. I am sure you have heard “find a niche and stick to it”. I am here to tell you the exact opposite. You DO NOT have to have a niche to start with! A niche can find you. 

When I first started in 2017 and even into 2018, I was all over the map. I had shirts, tumblers, decals, paper crafts, keychains – the list goes on and on. Around August 2019, I took a hard look at what items really sold well in my shop and found out that one theme, in particular, sold well above anything else. I knew from that moment that my niche found me! I began to shift my business in that direction and the results have been insane. 

How can I sell on Etsy?

Now that you know how to start your online business with DIY hobbies that make money. Setting up a shop is another primary step that you can take on your journey to building a different financial future. If you’re wondering how to set up an ETSY shop, check out this post I’ve written on making one.. By using this link here, you can get your first 40 listings for free! While this process is pretty straight forward, it’s the work afterward that will begin to test your commitment to creating a shop that will stand the test of time. Are you ready to become an Etsy seller? Follow along with me as we go from start to finish on opening an Etsy shop and the things you need to fill out first!