Sunday, May 20, 2007

Sole Proprietor as an LLC

June --

I am a signage broker: I design, subcontract construction and installation of business advertising and identification signs.

Without operating my business as a corporation, or llc, my insurance agent has informed me he has no insurance product that will protect my personnel assets in the event of a company liability claim. Since you advise against forming a corporation, how then should a sole proprietor provide for this financial risk?


Hello Jerry,

An LLC, limited liability company, is not a corporation. You may form an LLC as a disregarded entity. That means that you can be an LLC sole proprietorship. In this way you get ease of formation and recordkeeping along with asset protection. If you need even greater protection than afforded by an LLC and liability insurance then a corporation may be the way to go. But, before you do that, discuss it with a business attorney in your state -- not your insurance agent -- and make sure that you understand all the alternatives.

Be sure to read my post LLC? Incorporate?

I also recommend a book by Anthony Mancuso -- LLC or Corporation? How to choose the right form for your business. It's simply written and gives you a lot of basic information.