Sole Proprietorship vs LLC
Disclaimer: The information I’m sharing below is solely based on my experience. Take whatever helps you! You should consult a lawyer for further legal advice.
To get your business up and running as an artist, one of the first things you’ll need to decide is whether you want to operate as a Sole Proprietorship or LLC.
Sole Proprietorship: You run your own un-incorporated business as an individual and are self-employed. You are entitled to all the profits of the business and also for all of the liability.
LLC (Limited Liability Corporation): Your business can be owned by one or more people. Individuals are not personally responsible for business debts and liabilities.
In 2018, I decided to operate my business as an LLC after consulting with a lawyer. It gave me protection from liabilities, but the steep California yearly tax of $800 was quite daunting. I started later in the year, so I ended up paying the full amount for 2018 and then another fee a few months later for 2019. That’s $1600 in roughly 3 months. A big ouch for a small artist-run business. It wasn’t sustainable, so I dissolved the LLC at the end of 2019.
In 2021, I relaunched as a sole-proprietorship. With no yearly fees, this option has deemed much more sustainable for my business so far. Plus I have wiggle room for more art supplies!
Business permits & other requirements for Sole Proprietorship
Here’s a list of the most important permits that you’ll need to get you started. Consult a lawyer for further legal advice.
Employer Identification Number (EIN): You'll need an EIN to open a business bank account, apply for business licenses and file your tax returns.
Sales & Use Permit (Seller’s Permit): If you sell or lease tangible property, you must obtain a Seller's Permit.
FBA(Fictitious Business Name) or DBA (Doing Business As): required if you’re using a name that doesn’t include your surname. For example, I registered Turtle Heights as my FBN/DBA.
Thank you so much for reading! I hope this was helpful ☻ If you have any questions, feel free to drop me a note! Don’t forget to:
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