Why you shouldn't start a sole proprietorship as an Immigrant with an ITIN, EIN, SSN
Updated: Dec 27, 2022
Deciding what type of business structure is hard since you have to consider various things. That's why we break them down for you. This is why you shouldn't start a Sole Proprietorship:
You and the business are the same entities, so if you get sued or have debts, they will sue you and your business. That means if you have assets in the bank under your name, they can take those away from you since you and your business are the same entity.
A sole proprietorship is an unincorporated business owned and run by one person rather than a business structure. Because it is not a business structure, you will not have certain protections and benefits that LLCs, C-Corporations, and Partnerships have
Lastly, a sole proprietorship is not ideal for high-risk investments because it does not protect the business owner from damages.
Example Quote: “A house painter typically has a variety of equipment he needs for his business, including paint sprayers, ladders, a truck, a boom, pressure washer, and the tools needed to do paint jobs. Like many other self-employed workers, he wants to carry liability insurance. The simplest way to run the business is to set it up as a sole proprietorship.
The house painter doesn’t need to file two sets of taxes each year (one for himself and one for the business) and will have a lower tax rate. Sole proprietors can also use their business assets (such as vehicles) for personal use. However, sole proprietors don’t have the legal protections they would enjoy if they set up an LLC. Even if they carry a general liability insurance policy, this type of self-employed business owner might be better off setting up an LLC.” (https://smallbusiness.chron.com/selfemployment-llc-examples-22689.html)
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Reference: NOLO Working for yourself guide, Small Business Chron.