LLC or Sole Proprietorship?

If you operate the LLC properly, filing the proper forms (particularly tax forms) and keeping its operations and finances separate from your own personal doings, you are not, as a matter of law, personally liable for the LLC's obligations.  It's not that hard; millions of individuals maintain millions of small corporations and llc's.  The limitation on liability is the main reason why people incorporate or form llc's, and one of the main reasons such entities exist.  Many people find the protection from personal liability sufficiently important that they form llc's or corporations as a vehicle to conduct business despite the hassle, regulation, and (in some cases) double taxation. There are two caveats.  First, if you personally commit a tort, you personally can be liable, whether you use an llc, corporation, or not.  Thus if, in the course of your employment you run over someone, even though the llc is liable, you too are personally liable (your auto insurance, or the llc's auto insurance, would usually cover it.)  However, if the llc takes out a bank loan, and you don't personally guarantee it, you are not personally responsible to pay it. The second caveat is that those you do business with also know that owners are not personally liable for an llc's obligations, and they may require you to personally guarantee those obligations before they will do business with you.  For example, the bank probably will not give the llc a loan without a personal guaranty; a landlord probably will want you to personally guarantee the LLC's lease before he/she/it will rent to the LLC.