What is the difference between a sole proprietorship and an LLC in Washington state?

Sole proprietorship and limited liability company (LLC) are both two of the most popular business structures in Washington state. They can be good options for a small and medium sized business as they are easy to set up and flexible in terms of management. Here are some notable differences between a sole proprietorship and an LLC in Washington state:

• Liability protection
  • This is the main distinction between the two structures. An LLC can provide liability protection to its owner while a sole proprietorship cannot. That means owners of a sole proprietorship can be at risk of losing their personal assets if the business runs into a legal problem.
• Start-up process and costs
  • Unlike LLCs, Washington sole proprietorships are not required to register with the state and do not have to pay filing fees.
• Compliance
  • Washington Sole proprietorships are exempt from filing annual reports, which are required for LLCs in Washington. In addition, the tax filing process is much easier for sole proprietorships than for LLCs.