If you are starting a business, the question of whether to form a sole proprietorship or an LLC can be difficult. No one answer fits every situation, but there are some factors that need to be considered before making your decision. If you're looking to work for yourself but don't know where to start, learning how to set up your business by earning your Small Business Development Certificate from Tulane SoPA is a great first step.
A sole proprietorship is the simplest way to start a business, but it also has its downsides. On the upside, it is easy to start, inexpensive, and comes with less paperwork than an LLC. If you're starting a freelance business, this is a popular option. The downside to a sole proprietorship is that it does not offer any legal protection. You are personally responsible for your company's debts, lawsuits, and other liabilities, which can be financially devastating if you end up getting sued. Keep in mind that if you go into business with a partner, you cannot label your business as a sole proprietorship.