Page 122 - Winning The Credit Game Bundle (CK Patrick)

purposes because a DBA will not allow you to obtain
the legal standing you need to build business credit.
However, it is an option that can be confusing, so I
wanted to clarify its purpose.
Sole Proprietorship. Sole proprietorships are the
default type of business you are running if you are
running a business by yourself and have not
incorporated another type of business entity.
Freelancers and other self-employed people who don’t
work for a corporation are generally legally
considered sole proprietors.
This can make filing taxes easy, but sole
proprietorships do nothing to shield the business
owner from legal or financial liability. A sole
proprietor’s personal assets are not protected if their
business should go bankrupt or be sued. This is why
many sole proprietors eventually create an LLC or
other corporation for their business.
General Partnership. A general partnership is similar
to a sole proprietorship in that it is the default
business entity that is formed when two or more
people start doing business together. In some places, a
general partnership is automatically considered to
exist if two people are doing business together, even if
you haven’t filed any paperwork.
The drawbacks to a general partnership are similar to
those of a sole proprietorship. Partners aren’t
protected from debt or liability, so their personal assets
can be seized in the event of bankruptcy or lawsuit.
This can be especially dicey because one partner can
even be held responsible for business debts incurred
by the other partner without their knowledge. This is
another reason why LLCs are popular.
Limited Liability Corporation. This is a common
choice for new small businesses. Limited Liability
Corporations are the simplest legal entities that offer

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