Lettuce Glossary
Learn about the terms we use.
| Glossary Term | Definition | Related Pages |
|---|---|---|
| Articles of Organization | Articles of Organization is the official formation document filed with a state government agency to legally establish a Limited Liability Company. Also known as a “Certificate of Formation” or “Certificate of Organization” depending on the state, this document typically includes the LLC’s name, principal address, registered agent information, and the name(s) of the organizer(s). Once filed and approved, it creates the LLC as a legal entity; filing fees range from approximately $50 to $500 by state. |
How to Start a Small Business |
| Business-of-One | A Business-of-One is a solo-operated enterprise in which a single individual is simultaneously the owner, operator, and workforce of the business. Unlike “small business,” which can encompass teams and storefronts, a Business-of-One specifically centers the individual as the complete operational unit. The term is used to describe self-employed individuals running a service-based business without employees — from consultants and designers to therapists and engineers. |
Business Entity 101: A Solo’s Guide How to Start a Small Business |
| Corporate Compliance for an S Corp | Corporate Compliance for an S Corp refers to the set of ongoing legal, tax, and administrative obligations a business must fulfill annually to maintain its S Corporation tax status and good standing with state and federal authorities. Core annual requirements include paying the owner-employee a reasonable salary, running payroll with proper tax withholdings, making quarterly estimated tax payments, filing Form 1120-S (due March 15 each year), issuing Schedule K-1, and meeting state-level annual report and registered agent requirements. Failure to meet these obligations can result in IRS penalties or termination of S Corp status. |
S Corp Distributions vs. Salary Managing S Corp Taxes with Unpredictable Income S Corp 1099 Resource |
| DBA (Doing Business As) | A DBA (Doing Business As) — also known as a trade name, fictitious business name, or assumed name — is a registered name under which an individual or business entity operates that differs from its legal name. A DBA allows a sole proprietor or LLC to conduct business under a brand name without forming a separate legal entity. It does not create a new legal entity or provide additional liability protection; DBAs are registered at the state or county level and requirements vary by jurisdiction. |
How to Start a Small Business |
| Disregarded Entity | A Disregarded Entity is a business structure that the IRS does not recognize as separate from its owner for federal income tax purposes, meaning all business income and expenses flow directly to the owner’s personal tax return. The most common example is a Single-Member LLC. While disregarded for income tax purposes, the entity retains its legal status as a separate entity for liability protection and must use its own EIN for employment and certain excise taxes. |
Self-Employed Tax Brackets IRS: Single Member LLCs |
| EIN (Employer Identification Number) | An EIN (Employer Identification Number) is a unique nine-digit federal tax identification number assigned by the IRS to a business entity, used for tax reporting, banking, hiring, and other official purposes. Despite the name, an EIN is required even for businesses with no employees — it functions as the business equivalent of a Social Security Number. An EIN is necessary to open a business bank account, run payroll, and file Form 1120-S as an S Corp, and is obtained directly through the IRS at no cost. |
How to Open a Business Bank Account Bookkeeping Software for Solos |
| Form 2553 | Form 2553 is the IRS form — officially titled “Election by a Small Business Corporation” — used to elect S Corporation tax status for an eligible business entity. The form requires identifying information about the business, the intended effective date of the S Corp election, and the written consent of all shareholders. It must be filed with the appropriate IRS Service Center by the applicable deadline; once accepted, the IRS issues a formal confirmation letter. |
IRS Form 2553 Instructions Tax FAQs |
| Late S Corp Election Relief (Rev. Proc. 2013-30) | Late S Corp Election Relief under Revenue Procedure 2013-30 is an IRS procedure that provides a streamlined pathway for businesses to obtain S Corporation tax status retroactively when the original Form 2553 filing deadline was missed. To qualify, the business must have intended S Corp status from the desired effective date, submit the late election within 3 years and 75 days of that date, provide a reasonable cause explanation, and have filed all relevant returns consistently with S Corp status. The relief request is made by attaching a completed Form 2553 with a reasonable cause statement to the current-year Form 1120-S or by mailing directly to the IRS. |
IRS Late Election Relief Tax FAQs |
| LLC (Limited Liability Company) | An LLC is a flexible business structure authorized by state law that provides its owner(s) with limited personal liability for business debts and legal obligations. An LLC combines the liability protection of a corporation with the tax simplicity of a sole proprietorship or partnership. LLCs are governed at the state level, meaning formation requirements, fees, and annual obligations vary by state. |
LLC vs. S Corp How to Open a Business Bank Account Business Entity 101: A Solopreneur’s Guide |
| LLC vs. S Corp | LLC vs. S Corp describes the comparison between operating as a standard single-member LLC taxed as a disregarded entity and operating an LLC with an active S Corporation tax election. The key distinction is tax treatment, not legal structure — most solopreneurs who elect S Corp status do so as an LLC, keeping the LLC as the legal entity while adding the S Corp election as a tax overlay. A standard LLC subjects all net income to the 15.3% self-employment tax rate, while an LLC with an S Corp election allows the owner to split income between a salary (subject to payroll taxes) and owner distributions (not subject to self-employment tax). |
LLC vs. S Corp S Corp Tax Calculator |
| Operating Agreement | An Operating Agreement is an internal legal document that outlines the ownership structure, management responsibilities, and operating rules of a Limited Liability Company. For a single-member LLC, it typically documents that the sole member owns 100% of the company and has full authority over all business decisions. While not required in all states, an Operating Agreement is strongly recommended for all LLCs because it reinforces the legal separation between the business and its owner — a key factor in maintaining liability protection. |
Single-Member LLC Operating Agreement (California) |
| Pass-Through Taxation | Pass-Through Taxation is a tax treatment in which a business entity does not pay income tax at the entity level; instead, profits and losses pass through directly to the owners’ personal tax returns and are taxed at individual income tax rates. Pass-through taxation applies to sole proprietorships, partnerships, LLCs (by default), and S Corporations. For S Corp owners, it is particularly significant because the distribution portion of income — while still subject to personal income tax — is not subject to self-employment taxes. |
S Corp Distributions vs. Salary Self-Employed Tax Brackets |
| Piercing the Corporate Veil | Piercing the Corporate Veil is a legal concept in which a court disregards the separation between a business entity and its owner, holding the owner personally liable for business debts or legal judgments. This outcome — which eliminates the primary benefit of forming an LLC or corporation — typically occurs when an owner commingles personal and business funds, fails to maintain corporate formalities such as an Operating Agreement and separate business accounts, or uses the entity fraudulently. Maintaining a clear separation between personal and business finances is the most important practice for preserving liability protection. |
How to Open a Business Bank Account Bookkeeping Software for Solos |
| Registered Agent | A Registered Agent is a designated individual or business entity authorized to receive official legal and government correspondence — including lawsuits, tax notices, and compliance documents — on behalf of a business. Every LLC and corporation in the U.S. is required by state law to designate a registered agent with a physical address in the state of formation who is available during standard business hours. Professional registered agent services typically cost $50–$300 per year and are commonly used to maintain privacy and ensure legal documents are reliably received. |
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| S Corp | An S Corp (S Corporation) is a tax election status recognized under Subchapter S of the Internal Revenue Code that allows a qualifying business to pass corporate income, losses, deductions, and credits directly to its shareholders’ personal tax returns, avoiding corporate-level federal income tax. S Corp is a tax status, not a legal entity type — it is an election layered on top of an existing LLC or corporation. To qualify, a business must be a domestic entity with no more than 100 shareholders, all of whom must be U.S. individuals or qualifying trusts, with only one class of stock. |
What is an S Corp LLC vs. S Corp S Corp vs. Sole Proprietorship S Corp Tax Calculator |
| S Corp Election | An S Corp Election is the formal IRS process by which an eligible business entity officially chooses to be taxed under Subchapter S of the Internal Revenue Code. The election is made by filing IRS Form 2553 and must be submitted within 2 months and 15 days of the start of the tax year in which the election is intended to take effect, or at any time during the preceding tax year. All shareholders must consent to the election in writing, and once approved, it remains in effect until revoked or terminated. |
Best Time to Become an S Corp Tax FAQs |
| S Corp Formation Costs | S Corp Formation Costs are the one-time and recurring expenses associated with establishing and maintaining S Corporation tax status for a business entity. Typical one-time costs include state LLC formation filing fees (approximately $50–$500 depending on state) and professional fees for preparing and filing Form 2553. Ongoing annual costs include payroll processing, registered agent fees, and preparation of Form 1120-S (the S Corp annual business tax return). |
S Corp Tax Calculator |
| S Corp Income Threshold | The S Corp Income Threshold refers to the net income level at which electing S Corporation tax status typically generates enough self-employment tax savings to outweigh the added administrative costs of operating as an S Corp. There is no IRS-mandated minimum income requirement for an S Corp election; the threshold is a practical calculation. Tax professionals generally recommend the election for solopreneurs with net self-employment income of at least $60,000–$80,000 per year, with savings potential increasing significantly at higher income levels. |
Best Time to Become an S Corp Managing S Corp Taxes with Unpredictable Income S Corp Tax Calculator |
| S Corp vs. C Corp | S Corp vs. C Corp is a comparison of two corporate tax structures: the S Corporation, which passes income directly to shareholders’ personal returns, and the C Corporation, which is taxed as a separate legal entity at the corporate level. A C Corporation pays corporate income tax on its profits (currently a flat 21% federal rate), and shareholders then pay personal income tax on any dividends received — a phenomenon known as double taxation. An S Corporation avoids double taxation through pass-through treatment, making it the generally preferred structure for solopreneurs and businesses-of-one. |
What is an S Corp Tax FAQs |
| Single-Member LLC (SMLLC) | A Single-Member LLC (SMLLC) is a limited liability company with exactly one owner, making it the most common LLC structure for solopreneurs and self-employed individuals. For federal income tax purposes, the IRS treats an SMLLC as a “disregarded entity” by default, meaning its income and expenses are reported on the owner’s personal tax return rather than a separate business return. An SMLLC can elect to be taxed as an S Corporation by filing the appropriate IRS forms. |
IRS: Single Member LLCs |
| Sole Proprietorship vs. S Corp | Sole Proprietorship vs. S Corp is a comparison of the simplest default business structure for self-employed individuals against the tax-advantaged S Corporation election, highlighting differences in liability protection, tax treatment, and administrative requirements. A sole proprietorship is the automatic default legal status for any individual conducting business without a formal entity — it requires no registration but offers no liability protection and no mechanism to reduce self-employment taxes. An S Corp election (typically via an LLC) adds both liability protection and the ability to reduce self-employment tax through the salary/distribution income split. |
S Corp vs. Sole Proprietorship Business Entity 101: A Solopreneur’s Guide |
| Solopreneur | A Solopreneur is an individual who independently builds, operates, and scales a business without co-founders, partners, or employees. The term distinguishes a solopreneur from a freelancer (who typically exchanges time for money on a project basis) and a traditional entrepreneur (who generally builds toward a team and external investment). Common examples include independent consultants, coaches, content creators, and licensed contractors. |
Business Entity 101: A Solo’s Guide How to Start a Small Business |
Articles of Organization
Articles of Organization is the official formation document filed with a state government agency to legally establish a Limited Liability Company.
Also known as a “Certificate of Formation” or “Certificate of Organization” depending on the state, this document typically includes the LLC’s name, principal address, registered agent information, and the name(s) of the organizer(s). Once filed and approved, it creates the LLC as a legal entity; filing fees range from approximately $50 to $500 by state.
Also known as a “Certificate of Formation” or “Certificate of Organization” depending on the state, this document typically includes the LLC’s name, principal address, registered agent information, and the name(s) of the organizer(s). Once filed and approved, it creates the LLC as a legal entity; filing fees range from approximately $50 to $500 by state.
Related Pages
Business-of-One
A Business-of-One is a solo-operated enterprise in which a single individual is simultaneously the owner, operator, and workforce of the business.
Unlike “small business,” which can encompass teams and storefronts, a Business-of-One specifically centers the individual as the complete operational unit. The term is used to describe self-employed individuals running a service-based business without employees — from consultants and designers to therapists and engineers.
Unlike “small business,” which can encompass teams and storefronts, a Business-of-One specifically centers the individual as the complete operational unit. The term is used to describe self-employed individuals running a service-based business without employees — from consultants and designers to therapists and engineers.
Related Pages
Corporate Compliance for an S Corp
Corporate Compliance for an S Corp refers to the set of ongoing legal, tax, and administrative obligations a business must fulfill annually to maintain its S Corporation tax status and good standing with state and federal authorities.
Core annual requirements include paying the owner-employee a reasonable salary, running payroll with proper tax withholdings, making quarterly estimated tax payments, filing Form 1120-S (due March 15 each year), issuing Schedule K-1, and meeting state-level annual report and registered agent requirements. Failure to meet these obligations can result in IRS penalties or termination of S Corp status.
Core annual requirements include paying the owner-employee a reasonable salary, running payroll with proper tax withholdings, making quarterly estimated tax payments, filing Form 1120-S (due March 15 each year), issuing Schedule K-1, and meeting state-level annual report and registered agent requirements. Failure to meet these obligations can result in IRS penalties or termination of S Corp status.
Related Pages
DBA (Doing Business As)
A DBA (Doing Business As) — also known as a trade name, fictitious business name, or assumed name — is a registered name under which an individual or business entity operates that differs from its legal name.
A DBA allows a sole proprietor or LLC to conduct business under a brand name without forming a separate legal entity. It does not create a new legal entity or provide additional liability protection; DBAs are registered at the state or county level and requirements vary by jurisdiction.
A DBA allows a sole proprietor or LLC to conduct business under a brand name without forming a separate legal entity. It does not create a new legal entity or provide additional liability protection; DBAs are registered at the state or county level and requirements vary by jurisdiction.
Related Pages
Disregarded Entity
A Disregarded Entity is a business structure that the IRS does not recognize as separate from its owner for federal income tax purposes, meaning all business income and expenses flow directly to the owner’s personal tax return.
The most common example is a Single-Member LLC. While disregarded for income tax purposes, the entity retains its legal status as a separate entity for liability protection and must use its own EIN for employment and certain excise taxes.
The most common example is a Single-Member LLC. While disregarded for income tax purposes, the entity retains its legal status as a separate entity for liability protection and must use its own EIN for employment and certain excise taxes.
Related Pages
EIN (Employer Identification Number)
An EIN (Employer Identification Number) is a unique nine-digit federal tax identification number assigned by the IRS to a business entity, used for tax reporting, banking, hiring, and other official purposes.
Despite the name, an EIN is required even for businesses with no employees — it functions as the business equivalent of a Social Security Number. An EIN is necessary to open a business bank account, run payroll, and file Form 1120-S as an S Corp, and is obtained directly through the IRS at no cost.
Despite the name, an EIN is required even for businesses with no employees — it functions as the business equivalent of a Social Security Number. An EIN is necessary to open a business bank account, run payroll, and file Form 1120-S as an S Corp, and is obtained directly through the IRS at no cost.
Related Pages
Form 2553
Form 2553 is the IRS form — officially titled “Election by a Small Business Corporation” — used to elect S Corporation tax status for an eligible business entity.
The form requires identifying information about the business, the intended effective date of the S Corp election, and the written consent of all shareholders. It must be filed with the appropriate IRS Service Center by the applicable deadline; once accepted, the IRS issues a formal confirmation letter.
The form requires identifying information about the business, the intended effective date of the S Corp election, and the written consent of all shareholders. It must be filed with the appropriate IRS Service Center by the applicable deadline; once accepted, the IRS issues a formal confirmation letter.
Related Pages
Late S Corp Election Relief (Rev. Proc. 2013-30)
Late S Corp Election Relief under Revenue Procedure 2013-30 is an IRS procedure that provides a streamlined pathway for businesses to obtain S Corporation tax status retroactively when the original Form 2553 filing deadline was missed.
To qualify, the business must have intended S Corp status from the desired effective date, submit the late election within 3 years and 75 days of that date, provide a reasonable cause explanation, and have filed all relevant returns consistently with S Corp status. The relief request is made by attaching a completed Form 2553 with a reasonable cause statement to the current-year Form 1120-S or by mailing directly to the IRS.
To qualify, the business must have intended S Corp status from the desired effective date, submit the late election within 3 years and 75 days of that date, provide a reasonable cause explanation, and have filed all relevant returns consistently with S Corp status. The relief request is made by attaching a completed Form 2553 with a reasonable cause statement to the current-year Form 1120-S or by mailing directly to the IRS.
Related Pages
LLC (Limited Liability Company)
An LLC is a flexible business structure authorized by state law that provides its owner(s) with limited personal liability for business debts and legal obligations.
An LLC combines the liability protection of a corporation with the tax simplicity of a sole proprietorship or partnership. LLCs are governed at the state level, meaning formation requirements, fees, and annual obligations vary by state.
An LLC combines the liability protection of a corporation with the tax simplicity of a sole proprietorship or partnership. LLCs are governed at the state level, meaning formation requirements, fees, and annual obligations vary by state.
Related Pages
LLC vs. S Corp
LLC vs. S Corp describes the comparison between operating as a standard single-member LLC taxed as a disregarded entity and operating an LLC with an active S Corporation tax election.
The key distinction is tax treatment, not legal structure — most solopreneurs who elect S Corp status do so as an LLC, keeping the LLC as the legal entity while adding the S Corp election as a tax overlay. A standard LLC subjects all net income to the 15.3% self-employment tax rate, while an LLC with an S Corp election allows the owner to split income between a salary (subject to payroll taxes) and owner distributions (not subject to self-employment tax).
The key distinction is tax treatment, not legal structure — most solopreneurs who elect S Corp status do so as an LLC, keeping the LLC as the legal entity while adding the S Corp election as a tax overlay. A standard LLC subjects all net income to the 15.3% self-employment tax rate, while an LLC with an S Corp election allows the owner to split income between a salary (subject to payroll taxes) and owner distributions (not subject to self-employment tax).
Related Pages
Operating Agreement
An Operating Agreement is an internal legal document that outlines the ownership structure, management responsibilities, and operating rules of a Limited Liability Company.
For a single-member LLC, it typically documents that the sole member owns 100% of the company and has full authority over all business decisions. While not required in all states, an Operating Agreement is strongly recommended for all LLCs because it reinforces the legal separation between the business and its owner — a key factor in maintaining liability protection.
For a single-member LLC, it typically documents that the sole member owns 100% of the company and has full authority over all business decisions. While not required in all states, an Operating Agreement is strongly recommended for all LLCs because it reinforces the legal separation between the business and its owner — a key factor in maintaining liability protection.
Related Pages
Pass-Through Taxation
Pass-Through Taxation is a tax treatment in which a business entity does not pay income tax at the entity level; instead, profits and losses pass through directly to the owners’ personal tax returns and are taxed at individual income tax rates.
Pass-through taxation applies to sole proprietorships, partnerships, LLCs (by default), and S Corporations. For S Corp owners, it is particularly significant because the distribution portion of income — while still subject to personal income tax — is not subject to self-employment taxes.
Pass-through taxation applies to sole proprietorships, partnerships, LLCs (by default), and S Corporations. For S Corp owners, it is particularly significant because the distribution portion of income — while still subject to personal income tax — is not subject to self-employment taxes.
Related Pages
Piercing the Corporate Veil
Piercing the Corporate Veil is a legal concept in which a court disregards the separation between a business entity and its owner, holding the owner personally liable for business debts or legal judgments.
This outcome — which eliminates the primary benefit of forming an LLC or corporation — typically occurs when an owner commingles personal and business funds, fails to maintain corporate formalities such as an Operating Agreement and separate business accounts, or uses the entity fraudulently. Maintaining a clear separation between personal and business finances is the most important practice for preserving liability protection.
This outcome — which eliminates the primary benefit of forming an LLC or corporation — typically occurs when an owner commingles personal and business funds, fails to maintain corporate formalities such as an Operating Agreement and separate business accounts, or uses the entity fraudulently. Maintaining a clear separation between personal and business finances is the most important practice for preserving liability protection.
Related Pages
Registered Agent
A Registered Agent is a designated individual or business entity authorized to receive official legal and government correspondence — including lawsuits, tax notices, and compliance documents — on behalf of a business.
Every LLC and corporation in the U.S. is required by state law to designate a registered agent with a physical address in the state of formation who is available during standard business hours. Professional registered agent services typically cost $50–$300 per year and are commonly used to maintain privacy and ensure legal documents are reliably received.
Every LLC and corporation in the U.S. is required by state law to designate a registered agent with a physical address in the state of formation who is available during standard business hours. Professional registered agent services typically cost $50–$300 per year and are commonly used to maintain privacy and ensure legal documents are reliably received.
S Corp
An S Corp (S Corporation) is a tax election status recognized under Subchapter S of the Internal Revenue Code that allows a qualifying business to pass corporate income, losses, deductions, and credits directly to its shareholders’ personal tax returns, avoiding corporate-level federal income tax.
S Corp is a tax status, not a legal entity type — it is an election layered on top of an existing LLC or corporation. To qualify, a business must be a domestic entity with no more than 100 shareholders, all of whom must be U.S. individuals or qualifying trusts, with only one class of stock.
S Corp is a tax status, not a legal entity type — it is an election layered on top of an existing LLC or corporation. To qualify, a business must be a domestic entity with no more than 100 shareholders, all of whom must be U.S. individuals or qualifying trusts, with only one class of stock.
Related Pages
S Corp Election
An S Corp Election is the formal IRS process by which an eligible business entity officially chooses to be taxed under Subchapter S of the Internal Revenue Code.
The election is made by filing IRS Form 2553 and must be submitted within 2 months and 15 days of the start of the tax year in which the election is intended to take effect, or at any time during the preceding tax year. All shareholders must consent to the election in writing, and once approved, it remains in effect until revoked or terminated.
The election is made by filing IRS Form 2553 and must be submitted within 2 months and 15 days of the start of the tax year in which the election is intended to take effect, or at any time during the preceding tax year. All shareholders must consent to the election in writing, and once approved, it remains in effect until revoked or terminated.
Related Pages
S Corp Formation Costs
S Corp Formation Costs are the one-time and recurring expenses associated with establishing and maintaining S Corporation tax status for a business entity.
Typical one-time costs include state LLC formation filing fees (approximately $50–$500 depending on state) and professional fees for preparing and filing Form 2553. Ongoing annual costs include payroll processing, registered agent fees, and preparation of Form 1120-S (the S Corp annual business tax return).
Typical one-time costs include state LLC formation filing fees (approximately $50–$500 depending on state) and professional fees for preparing and filing Form 2553. Ongoing annual costs include payroll processing, registered agent fees, and preparation of Form 1120-S (the S Corp annual business tax return).
Related Pages
S Corp Income Threshold
The S Corp Income Threshold refers to the net income level at which electing S Corporation tax status typically generates enough self-employment tax savings to outweigh the added administrative costs of operating as an S Corp.
There is no IRS-mandated minimum income requirement for an S Corp election; the threshold is a practical calculation. Tax professionals generally recommend the election for solopreneurs with net self-employment income of at least $60,000–$80,000 per year, with savings potential increasing significantly at higher income levels.
There is no IRS-mandated minimum income requirement for an S Corp election; the threshold is a practical calculation. Tax professionals generally recommend the election for solopreneurs with net self-employment income of at least $60,000–$80,000 per year, with savings potential increasing significantly at higher income levels.
Related Pages
S Corp vs. C Corp
S Corp vs. C Corp is a comparison of two corporate tax structures: the S Corporation, which passes income directly to shareholders’ personal returns, and the C Corporation, which is taxed as a separate legal entity at the corporate level.
A C Corporation pays corporate income tax on its profits (currently a flat 21% federal rate), and shareholders then pay personal income tax on any dividends received — a phenomenon known as double taxation. An S Corporation avoids double taxation through pass-through treatment, making it the generally preferred structure for solopreneurs and businesses-of-one.
A C Corporation pays corporate income tax on its profits (currently a flat 21% federal rate), and shareholders then pay personal income tax on any dividends received — a phenomenon known as double taxation. An S Corporation avoids double taxation through pass-through treatment, making it the generally preferred structure for solopreneurs and businesses-of-one.
Related Pages
Single-Member LLC (SMLLC)
A Single-Member LLC (SMLLC) is a limited liability company with exactly one owner, making it the most common LLC structure for solopreneurs and self-employed individuals.
For federal income tax purposes, the IRS treats an SMLLC as a “disregarded entity” by default, meaning its income and expenses are reported on the owner’s personal tax return rather than a separate business return. An SMLLC can elect to be taxed as an S Corporation by filing the appropriate IRS forms.
For federal income tax purposes, the IRS treats an SMLLC as a “disregarded entity” by default, meaning its income and expenses are reported on the owner’s personal tax return rather than a separate business return. An SMLLC can elect to be taxed as an S Corporation by filing the appropriate IRS forms.
Related Pages
Sole Proprietorship vs. S Corp
Sole Proprietorship vs. S Corp is a comparison of the simplest default business structure for self-employed individuals against the tax-advantaged S Corporation election, highlighting differences in liability protection, tax treatment, and administrative requirements.
A sole proprietorship is the automatic default legal status for any individual conducting business without a formal entity — it requires no registration but offers no liability protection and no mechanism to reduce self-employment taxes. An S Corp election (typically via an LLC) adds both liability protection and the ability to reduce self-employment tax through the salary/distribution income split.
A sole proprietorship is the automatic default legal status for any individual conducting business without a formal entity — it requires no registration but offers no liability protection and no mechanism to reduce self-employment taxes. An S Corp election (typically via an LLC) adds both liability protection and the ability to reduce self-employment tax through the salary/distribution income split.
Related Pages
Solopreneur
A Solopreneur is an individual who independently builds, operates, and scales a business without co-founders, partners, or employees.
The term distinguishes a solopreneur from a freelancer (who typically exchanges time for money on a project basis) and a traditional entrepreneur (who generally builds toward a team and external investment). Common examples include independent consultants, coaches, content creators, and licensed contractors.
The term distinguishes a solopreneur from a freelancer (who typically exchanges time for money on a project basis) and a traditional entrepreneur (who generally builds toward a team and external investment). Common examples include independent consultants, coaches, content creators, and licensed contractors.
Related Pages
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