Businesses can turn out better than expected. What you started as a weekend sideline may have reached the point where you can dedicate yourself to it full time. If this is the case, you may want to check if your current business structure is still fit for purpose.
Setting up as a sole proprietor is easy. Many people taking their first steps into the business world do this because it is quick and cheap. Yet, the more time you spend in business, the more you will learn that a sole proprietorship has some significant limitations.
Limited liability companies protect you if your business hits issues
The biggest disadvantage to a sole proprietorship is that you leave yourself and your personal property vulnerable. For example, if someone chokes on an oversize chickpea at your veggie burger stand and decides to sue you, you could lose your home, as well as your stall.
If, instead, you convert the business to Chuck’s Chickpea Burgers LLC, then it draws a clear legal division between what belongs to the company and what belongs to Charles. A disgruntled client might take your food truck, but they won’t take your fitted kitchen and the house it sits in.
Limited liability companies (LLCs) also have tax advantages that you will not get with a sole proprietorship. You might even consider that having LLC on your business card will help you stand out from all the other owner-operated food trucks when seeking investment to expand across the state.
Working out what is the best business entity for your company may seem complex. Yet, there is help available to understand more so you can make the right choice for you and your business.