LLC vs. Sole Proprietor: Which One is Right for Your Creative Business?

If you're running a business as an artist, creative, or entrepreneur, you’ve probably asked:

“Do I really need an LLC, or can I stay a sole proprietor?”

This question can feel confusing—especially when you're juggling creativity and business at the same time. But choosing the right business structure is crucial for your legal protection, taxes, and long-term growth.

Let’s break down the pros and cons of LLC vs. Sole Proprietorship—and help you decide which fits your business best.

🔍 What’s the Difference?

Sole Proprietor
This is the default business structure. If you’re selling art, consulting, coaching, or creating without forming a legal entity, you’re a sole proprietor.

LLC (Limited Liability Company)
An LLC is a legal business entity you register with the state. It separates your personal assets from your business.

🛡️ 1. Legal Protection

Sole Proprietor:
No legal separation between you and your business. If someone sues your business, your personal assets (car, home, bank account) are at risk.

LLC:
Limits your personal liability. Your business is its own entity, so your personal assets are generally protected if someone sues or the business is in debt.

💡 Verdict: If you want real protection, an LLC is the safer choice.

💰 2. Taxes

Sole Proprietor:
Simpler tax filing. Business income = personal income. But you’ll pay self-employment tax on everything you earn.

LLC:
By default, LLCs are taxed the same way—but they offer more flexibility. You can choose to be taxed as an S Corp, which may reduce self-employment taxes and save money as you grow.

💡 Verdict: Sole proprietorship is easier for side hustles or hobby income. LLCs offer smarter tax strategies once your income increases.

📈 3. Business Growth & Credibility

Sole Proprietor:
Lower startup cost and fewer formalities—but it may not give the same impression of professionalism or security to clients and collaborators.

LLC:
Gives your business legitimacy. You can open a business bank account, get better brand protection, and work with bigger clients who may require contracts with legal entities.

💡 Verdict: If you're serious about growing your business, forming an LLC shows you're in it for real.

💡 So... Should You Form an LLC?

Here’s a quick checklist to help you decide:

 ✅ You're making more than $30k–$50k/year in your business
✅ You want to protect your personal assets
✅ You’re signing contracts, hiring help, or scaling up
✅ You’re ready to build a legit brand with legal protection

If you said yes to most of these… it’s probably time to form an LLC.

👩🏾‍⚖️ Final Thoughts from a Business Attorney

Starting as a sole proprietor is totally normal—and great for testing your ideas. But once you know you’re in business, switching to an LLC gives you the legal foundation to grow confidently and securely.

The good news? It’s not as complicated as it sounds—and you don’t have to figure it out alone.

📩 Need help forming your LLC?
I help creatives, artists, and entrepreneurs protect their business and simplify the legal side of doing what they love.

DM me or book a consult today. Let's get your business legit.