Though the term “solopreneur” is used interchangeably with “freelancer,” “self-employed,” “entrepreneur” or “small business owner,” there are distinctions between them. What they have in common are self-employment taxes and filing 1099 forms. Your business may be more than one.
- Small Business Owner – One who attempts to successfully operate a company to gain profit. They get the first right of profit and make decisions. They sell specific products or services which customers come to them to obtain. They may have employees.
- Self-Employed – One who earns a living based on their own business or profession as opposed to a wage or salary from an employer. They are technically a business owner and their own boss, though they may not operate with a formal structure that includes others.
- Freelancer – One who, through short-term, one-off and multiple commitments, pursues a profession, doesn’t make long-term commitments to one employer, may work remotely or travel and usually tailors skills and services to match the needs of many clients.
Solopreneurs vs Entrepreneurs
Instead of offering established products and services, entrepreneurs and solopreneurs develop new or innovative services or solutions, while assuming all the risks of their enterprise. Differences between them:
- Entrepreneur – Works alone at the beginning, grows the business, manages others to leave them in charge. They make money by developing and selling a profitable business. They may have more than one business going at a time.
- Solopreneur – They focus on one passion, and often for the rest of their career. They usually work alongside other workers or investors they bring in. They build and stay with one company.
Solopreneurs as a Business Entity
Solopreneurs have two business structure choices:
- Limited Liability Company (LLC) – LLCs are popular because they provide corporation liability protection but allow the owner to reserve and choose a company name. The management type they choose may decide how their LLC is taxed.
- Sole Proprietorship – The easiest to set up. Owners may engage in business using their surname or use a DBA (doing business as) fictional company name. The name won’t be reserved. Tax liabilities are reflected on personal tax returns under their social security number ID, leaving personal assets at risk in a lawsuit.
The business entity you chose has serious tax and legal implications. The Law Offices of S. Mark Burr can go through all the details and your questions when setting up your business entity. Let us help you create the perfect business structure by calling us today.