In the first quarter of 2021, nearly 1.35 million new business applications were made in the United States alone. This is nearly double the number of applications that were made during the same period in the previous year.

From this, it’s clear that there’s a lot of interest among people in entrepreneurship and a lot of them are trying their hands at it. If you’re one of those aspiring entrepreneurs, you’ve come to the right place.

As a new entrepreneur, it can be challenging for you to establish your new business. And you’ll also need to find the correct business structure for your company. This choice can be difficult when you have to choose between Sole Proprietorships and LLCs as they have a lot of similarities.

So, here are the various similarities and differences between them.

Who Owns the Business?

If you’re planning to start a business as the sole owner, you have the option to choose between Sole Proprietorships and LLCs. However, if you want partners and multiple owners, LLCs are the only choice.

Additionally, if you’re not an individual, you can’t own a Sole Proprietorship firm. LLCs allow other LLCs and foreign firms to be owners as well as individuals. You can find list of the best LLC services at

How is the Business Taxed?

When it comes to business taxation, Sole Proprietorships and LLCs both provide a feature called pass-through taxation. This feature means that the profits and losses of the business would pass on to the owners. As a result, you’ll be saved from double taxation. However, you’d still have to pay a self-employment tax.

How Can You Start the Business?

The process of starting the business is also influenced by the business structure that you choose. Starting a Sole Proprietorship is easy. You can seamlessly set it up and start running it under your name.

However, for LLCs, there are a host of steps that you’d have to go through. These include:

  • Filing your Articles of Organization
  • Paying your state filing fees
  • Drafting your LLC Operating Agreement

These aren’t the only similarities and differences among LLCs and Sole Proprietorships, though. To learn more about them, you can check the below infographic created by GovDocFiling.

Sole Proprietorship vs LLC