- PPF Points
- 5,064
When I started my online business, I had no idea what legal structure to choose. I kept hearing terms like “LLC,” “Sole Proprietor,” and “Corporation,” but they all sounded like complicated legal stuff. All I wanted to do was sell my products and stay out of trouble.
So, I did what most beginners do—I started as a Sole Proprietor. It was the easiest and cheapest option. I didn’t have to file any special paperwork to get started. I just began selling my custom t-shirts online and tracked my income and expenses. But as things grew, I started wondering if it was time to consider a different structure.
Here’s what I’ve learned, and what helped me decide:
This is the most basic structure. It’s perfect if you’re just starting out, especially if you’re running the business by yourself.
Why I liked it at first:
Downside: I was personally liable for everything. If something went wrong or someone sued me, they could come after my personal assets—like my car or savings. That scared me a bit as the business started growing.
After 8 months, I decided to switch to an LLC. It gave me legal protection (separated me from my business) and still kept things simple.
What I liked about forming an LLC:
Cost: In my state, it cost about $100–$150 to set up. I also needed to get an EIN (Employer Identification Number), which was free from the IRS.
Tip: Some customers took me more seriously once I added “LLC” after my business name. It gave my brand a more professional image.
I haven’t gone this route yet, but I looked into it. Corporations are more complex and usually better for businesses with multiple investors, employees, or people looking to raise big money.
Pros:
Cons:
If you're a solo entrepreneur like me, a corporation is usually overkill—unless you’re growing fast and plan to bring on investors.
Here’s what helped me decide:
No matter what you choose, the most important thing is to get started. You can always upgrade your structure later, like I did. I started small, learned as I went, and changed when it made sense.
If I figured it out, so can you. Don’t let the legal stuff stop you from building your dream.
So, I did what most beginners do—I started as a Sole Proprietor. It was the easiest and cheapest option. I didn’t have to file any special paperwork to get started. I just began selling my custom t-shirts online and tracked my income and expenses. But as things grew, I started wondering if it was time to consider a different structure.
Here’s what I’ve learned, and what helped me decide:
Sole Proprietorship
This is the most basic structure. It’s perfect if you’re just starting out, especially if you’re running the business by yourself.
Why I liked it at first:
- Easy and free to set up
- Simple tax filing (my business income went on my personal tax return)
- No separate business bank account needed at the beginning
Downside: I was personally liable for everything. If something went wrong or someone sued me, they could come after my personal assets—like my car or savings. That scared me a bit as the business started growing.
LLC (Limited Liability Company)
After 8 months, I decided to switch to an LLC. It gave me legal protection (separated me from my business) and still kept things simple.
What I liked about forming an LLC:
- It protected my personal assets
- It made my business feel more “real” and trustworthy
- I could still file taxes fairly easily
Cost: In my state, it cost about $100–$150 to set up. I also needed to get an EIN (Employer Identification Number), which was free from the IRS.
Tip: Some customers took me more seriously once I added “LLC” after my business name. It gave my brand a more professional image.
Corporation (C Corp or S Corp)
I haven’t gone this route yet, but I looked into it. Corporations are more complex and usually better for businesses with multiple investors, employees, or people looking to raise big money.
Pros:
- Can raise capital by issuing stock
- May offer tax benefits in certain situations
- Good if you want to scale big
Cons:
- More paperwork and stricter rules
- Separate tax returns
- Costly and more complex to manage
If you're a solo entrepreneur like me, a corporation is usually overkill—unless you’re growing fast and plan to bring on investors.
So Which One Should You Choose?
Here’s what helped me decide:
- Just starting out? Go with Sole Proprietorship. Keep it simple.
- Growing and want protection? Consider an LLC.
- Planning to raise money or have multiple founders? Look into a Corporation.
No matter what you choose, the most important thing is to get started. You can always upgrade your structure later, like I did. I started small, learned as I went, and changed when it made sense.
If I figured it out, so can you. Don’t let the legal stuff stop you from building your dream.