Sole Prop vs LLC vs S-Corp — Pick Your Lane

The three entities you'll actually consider

Sole Proprietorship

The default if you do nothing. Pros: zero setup. Cons: no liability protection — a single lawsuit can come after your personal home, car, and savings. You report income on a Schedule C with your personal 1040.

LLC (Limited Liability Company)

Pros: personal asset protection if you're sued, separates business from personal finances, flexible tax treatment. Cons: $50–$500 filing fee depending on state, annual report requirements in most states.

S-Corp election (on an LLC)

Pros: pay yourself a "reasonable salary" and take the rest as distributions, which saves on self-employment tax (15.3%). Cons: requires payroll setup, more bookkeeping, and only makes sense once you're netting ~$45,000+ annually. Below that, the bookkeeping cost eats the savings.

A simple decision tree

• Making less than $20k/year and not in client homes alone? → Sole prop is acceptable short-term, but get insurance.
• Going into client homes, walking dogs, or handling sick animals? → LLC immediately.
• Netting more than $45k/year? → LLC with an S-Corp election. Talk to a CPA.

The myth

"My business is small, I don't need an LLC." A single dog bite, a slip-and-fall on a wet floor while you're sitting, or a lost pet that's never found can result in five-figure (or higher) legal exposure. The IRS and the courts don't care that you're "small."

What you'll do this week

1. Pick your state of formation (your home state in 95% of cases).
2. Search business name availability on your Secretary of State website.
3. Move to Lesson 2 — we'll form the LLC together in 45 minutes.