Never a Sole ProprietorshipFirst, there is no substitue for qualified legal and tax advice - good lawyers and accountants. That said, I will give you my advice as a 22 year veteran in restaurants, having launched a lot of great places in Chicago.
The sole proprietorship is the worst possible way to organize a business that may have issues some day related to negliegence or liability. All of your personal assets, present and future, may be at risk. Forget it.
The LLC is a contemporary, beautiful way of organizing a small (or large) business. Simply speaking, an LLC has all of the advantages of a Partnership (taxed once at the ownership level, control and cash distribution as determined by an agreement instead of raw number of shares owned) and it has the advantages of a corporation (individuals are typically safe from personal liability, investors are only at risk for the amount they've invested). The beauty of an LLC is that you (as the owner) can dictate the terms in which your investors are paid back, who is in charge, etc., etc.
I saw a post that argued that LLC distributions were taxed at a lower rate than owner salary. BS. Check with your tax advisor on that one. Big land mine.
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