Starting a business and you have significant personal assets would you set the business up as an LLC or sole proprietorship?

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pohnpei397 eNotes educator| Certified Educator

If you are starting a business and you have significant personal assets you would have to be nuts to set it up as a sole proprietorship instead of an LLC.  Unless, I suppose, you were not going to ever incur any debts (like if you did not have to buy any inventory because you're just working as a consultant or something).

The problem with being a sole proprietor is that you have unlimited liability.  If your business incurs debt, your personal resources can be taken to pay that debt.  In an LLC, only the company's assets can be taken to pay debts.