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In beginning a home-based internet company where I'm the only employee, will filing for a sole proprietorship provide enough protection?

Deciding whether to form an LLC or other corporate entity will depend on the type of business you are operating, even if you are the sole employee and the business is run out of your house and on your computer.

Internetbusinessanswers.com in “Should I run my new business as a sole proprietorship,” explains some of the reasoning for both entities. It mainly comes down to whether you want the limited liability protection of a corporate entity.
Here are some things to consider:

• If you are engaged in any kind of business where you could be potentially liable—such as in making or distributing a product that has the potential to cause injury—then you want corporate protection. Otherwise, all of your assets are at risk.
• You are personally liable for a variety of risks, including copyright violations, trademark infringement and giving poor advice.
• Consider that you will be taxed at a higher level as a sole proprietor even though you can deduct many things as a business expense.
• As a sole proprietor, you are personally and solely liable for all debts and business transactions.
• Some client businesses may prefer that you be a corporate entity, so you may lose business as a result.

Setting up an LLC is easy, you can do it yourself and you do not have to follow all the formal corporate requirements. But you do have to keep all business transactions separate from your personal business to keep your corporate identity.

Information and data contained in this post gathered in association with a NJ medical malpractice attorney at Lynch Lynch Held Rosenberg & Perkins, P.C.