Who is this article for?
Independent contractors or solo business owners looking to set up a business.
In general, there are two main business types for independent contractors. The table below gives a snapshot of the differences between each.
Sole Proprietor
- Simplest and most common business structure.
- Inexpensive to form as there is little to no upfront cost
- You, as the owner, are not a separate legal entity and therefore are not protected from business liabilities.
For more information on sole proprietors and how to register to become one, see the Sole Proprietor article.
Single Member LLC
- Can be formed with only one member and obtain corporate tax status.
- Your business is separate from you; as the owner, therefore, your personal assets are protected from business liabilities.
- Can be set up as a “disregarded entity” or as a “corporation”.
For more information on Single Member LLCs and how to register one, see Single Member LLC.