Question:

Sole Proprietorship or LLC for a web-design company?

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I am a college student in Chicago studying web design. I want to start a web design company that would basically be a website. I dont know if I should start a Sole Proprietorship or a LLC. Which will the most beneficial for a web site for web-design?

Thanks in advance,

SixOne13

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  1. I am not sure about the USA but i assume the process of starting a company are basically the same as here in the UK.

    Basically, anyone can be a sole proprietor, and in essence, you are responsible for your own tax returns. If the law is the same as here in the UK, which i believe it is, it is essentially that you, and the company are one and the same legal entity. Your debt is your companies debt, and the company profit is your own personal money (excluding tax of course).

    I believe that as a sole proprietor you can trade as whatever you like (So long as it's legal, I wouldn't try trading as Microsoft, for example) and can have as many "companies" as you like. You can also employ people if the need arises, but again, as a sole proprietor, you are personally responsible for paying them if the company doesn't make what you expect.

    To start out with, however, a sole proprietor is the way to go. Much fewer overheads, less paperwork, and most importantly, you can do it on your own without the need to include others, as is often required in an LLC.

    Since I assume for the foreseeable future this is basically going to be you working for yourself, the advantages of a sole proprietorship (simple, no formal governance, no need to fill out lots of paperwork) far outweigh those of an LLC (who's only real advantage to you would be limited liability, which would probably be negated by the fact you would still have to personally take responsibility for loans etc).

    If your company becomes successful, and you find yourself with other partners etc, you can always pretty easily turn yourself into an LLC or corporation in the future.

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