What is better for a hair weave extension business – an LLC or sole proprietorship?
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What is better for a hair weave extension business – an LLC or sole proprietorship?
I want to start my own hair weave extension business selling weave online. I
don’t want a store just yet so online is best for me. Before I dig more into my
business plan I want to get advice on what type of business should I go with,
LLC or sole proprietorship. From my knowledge, an LLC is making your business a separate entity, what my business makes is money for my business and not my personal income but I can put myself on payroll to get paid from my business. My businesses taxes are different from mines. With sole proprietorship there are no legal separations between my business and I. I will be responsible for the debt of my business, if something does wrong I am responsible for it because there is no separation between my business and my personal assets. With the type of business I want to start what would be better? I plan on getting funding from other places and use as little as I can of my income to start this. I have a feeling an LLC is better but I may need help understand them both more.
Asked on October 22, 2018 under Business Law, Massachusetts
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
LLC is the way to go for any business. An LLC, or "limited liability company," makes the business a separate legal entity or "person" from yourself: that means that you are not responsible for the businesse's debts or obligations (e.g. a lease; a loan; equipment or supplies or inventory financing; etc.) unless you personally guaranteed them; it also means that if the business is sued for some reason, you and your personal assets are protected, unless you personally injured, etc. some other person, in which case you can be sued as the person causing the injury (and not because you are the business owner).
On the other hand, with a sole proprietorship, there is no separate business--you are the business, and are liable or responsible for all its debts and obligations, and if the business is sued, you are the person being sued.
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