LLC vs Sole Proprietorship: Choosing the Right Structure for 2025

When starting or growing a business, one of the first decisions is how to structure it. Two of the most common choices are sole proprietorship and LLC. Here’s what to know for 2025:

Sole Proprietorship

• Easiest and cheapest to start

• Income is reported directly on your Schedule C

• No liability protection—your personal assets are at risk

LLC (Limited Liability Company)

• Provides liability protection between personal and business assets

• Flexible taxation (can be taxed as sole prop, partnership, or S-Corp)

• Slightly more setup/admin cost, but worth it for protection

Which Should You Choose?

If you’re just testing out a side hustle, sole proprietorship might work. But if you’re serious about building a long-term business, an LLC offers greater protection and credibility.

Need help deciding? Be Well & Co. offers business consulting to help entrepreneurs choose the right structure and manage compliance with confidence.

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This reminder is provided for educational purposes only and does not constitute financial, legal, or tax advice. Please consult with a qualified professional about your specific situation.

Written by Courtney A. Mallow, IRS-Registered Tax Preparer, Certified Fraud Examiner (CFE), Certified Personal Financial Wellness Consultant℠, and Founder of Be Well & Co. Financial Consulting. Courtney helps self-employed individuals, people living abroad, and global professionals align their money with their values.