structural differences between registering as a Sole Proprietor vs. an LLC

 Choosing between a Sole Proprietorship and a Limited Liability Company (LLC) changes your personal financial risk, tax structure, and the exact steps you need to take with the City of Torrance. [1, 2]

• Sole Proprietorship: You and your business are legally the exact same entity. If a client sues your salon suite or the business falls into debt, your personal savings, car, and home can be taken to pay those debts. [1, 2, 3, 4, 5]
• LLC: The business is a separate legal "person." If a client sues your business, only the business's assets (like your massage table, supplies, and business bank account) are at risk. Your personal assets are legally protected. [1, 2, 3, 4, 5]

• Sole Proprietorship: This is the cheapest and easiest option. There are no state filing fees. You simply register a Fictitious Business Name (DBA) with Los Angeles County if you want to use a business name like "Serene Bodywork" instead of your own name. [1, 2, 3, 4, 5]
• LLC: This is more expensive. You must file Articles of Organization with the California Secretary of State and pay a $70 filing fee. You must also pay the mandatory $800 annual California franchise tax every year, regardless of how much money your suite makes. [1, 2, 3, 4, 5]

• Sole Proprietorship: All business profits flow directly onto your personal tax return (Schedule C). You do not file a separate business tax return. [1, 2, 3, 4, 5]
• LLC: For a single-owner suite, the IRS taxes you exactly like a sole proprietorship by default. However, you must keep your personal and business bank accounts completely separate. If you mix your personal and business money, you lose your legal asset protection. [1, 2, 3, 4]

• If Sole Proprietor: Your Torrance Business License and Massage Operator Permit will be issued directly in your legal name.
• If LLC: Your Torrance licenses will be issued in your LLC's name. The city will require copies of your state LLC filing documents before approving your Operator Permit.