When choosing a business structure, understanding the difference between sole proprietor and LLC is crucial. A sole proprietor runs a business as a single individual and assumes unlimited personal liability: there is no separation between personal and business assets. In contrast, an LLC (Limited Liability Company) offers limited liability protection, meaning owners’ personal assets are generally shielded from business debts. LLCs also allow easier transfer of ownership, potential tax flexibility, and a more formal structure. However, LLCs often involve higher costs, more regulatory compliance, and additional paperwork. For small ventures with minimal risk, a sole proprietorship may suffice, but for growth and liability protection, forming an LLC is usually wiser.