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Should I Go into Business as a Sole Proprietorship or an LLC?

Being a business owner requires you to assess a situation and make the best decision that will protect you, your family, and your company. There are many options to consider when you decide to go into business for yourself. For example, do you set up an office in a rented space or in your home? Do you have to use a personal credit card to buy business items? Where should you bank? What licenses are you required to have? The list continues. One item that should be handled in the beginning is the type of business entity under which you will operate.

Remember that the best decision you can make is to purchase contractor insurance for your Texas company. At the Nowell Agency, we work with many different kinds of contractors and industries. We understand the unique circumstances you deal with and are ready to customize a policy that fits your needs and budget.

Sole Proprietor VS LLC – Which One Should You Choose?

The moment you start doing business as an unincorporated entity, you are considered a sole proprietor. Some people choose to continue operating this way. Some seek out other options such as a limited liability company (LLC), S-corp, or corporation. Which one you choose is up to you. Here are the main differences to help you make the decision:

  • Debt Liability:
    • A sole proprietor is personally liable for all debts incurred by the business. This includes lawsuits. If business assets cannot satisfy a judgment, then your personal assets can be taken.
    • A limited liability company (LLC) can be owned by a single person. The LLC is liable for any business debts and lawsuits. The owner’s personal assets cannot be taken to satisfy a debt.
  • Costs to Set Up Business:
    • As a sole proprietor, there is minimal start up cost or paperwork. Of course, you are responsible for tax withholdings and insurance.
    • An LLC generally has to pay a fee and fill out some paperwork. This can take a few weeks to formalize.
  • Business Credit and Loans:
    • Sole proprietors will have to depend on their personal credit scores and ability to repay without the credibility that a registered business has.
    • LLC’s can enjoy more access to loans and credit as they are considered less risky to a lender.
  • Ownership:
    • As the name suggests, a sole proprietorship is owned by one person.
    • An LLC can be owned by one or more people, corporation, partnerships, trusts, estates, or even other LLCs.
  • Continuing Business after Death:
    • When you die, your business will cease to operate when you are a sole proprietorship.
    • If you have an LLC, it can continue operating even when you pass away when you set up the proper operating agreements.

Protect Your Business’s Future with Contractor’s Insurance

Avoid new owner mistakes when you weigh the different options and choose the best business entity for your industry. Remember to protect all your assets with the right contractor’s insurance. An appointment with the Nowell Agency will help you get the coverage you need at reasonable rates. We work with contractors across many different industries. Rest assured, we have you covered.

Call one of our offices near you to schedule a meeting with a knowledgeable and experienced broker at The Nowell Agency about contractor insurance in Texas. Request a quote online.


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    The Nowell Agency has been my primary agent for many years and they are attentive, well-staffed, and easy to talk to. Their agency has helped me through state to state moves and career change and kept my assets covered.

    James G.

    My very first insurance experience was when I bought my first house and I called the Nowell agency for a quote. I had no idea what I needed or how much and they were so very kind and knowledgeable and explained everything to me in detail which I so much appreciated. That has been 4 years ago and im still a customer never plan to leave.

    Ashleigh D.

    I have been very pleased with the quick and professional service by the Nowell agency. My agent was very efficient at locating a policy that met my needs and budget. Thank you to Kristy and the Nowell agency for providing me with fantastic customer service. I highly recommend this agency. You will not be disappointed.

    Tripp W.


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