Many people have a difficult time determining whether they should go with a sole proprietorship or an LLC when forming a new business. While there are many LLC benefits, there are also many advantages that come from going with a sole proprietorship.
Sole proprietorships are the simplest and most popular type of business formation for new businesses, but they lack certain legal and tax advantages that LLC organizations possess. When it comes to the sole proprietorship vs LLC debate, the net income or loss from a business is listed on the business owner’s personal income taxes if they are a sole proprietor. The main benefit of forming a sole proprietorship is that it is an extremely simple process and it is relatively easy to operate under this type of business structure.
Comparatively, an LLC is viewed as a separate business identity. Those who own an LLC are viewed as investors, and the actions of the organization are managed by designated managers or the managers themselves. Depending on how the LLC is structured, the income is taxed directly by the investors.
Business owners should carefully consider whether they want to take on the tax liability of a sole proprietorship or go with the more complicated structure of an LLC based on their personal interests and the goals of their organization.
When a designation has been confirmed, business owners in need of a sole proprietorship tax ID can benefit from the simplified filing process we offer at IRS EIN Tax ID Filing Service.
Having access to a federal tax ID number is one of the most important parts of starting a new business. When you let us assist you with the process, we can email this sensitive information directly to you, so you do not have to worry about following up later on. Find out more about our simplified filing process by contacting us today.