There is a huge difference. Operating your business as a sole proprietorship means that you are running your business in your individual capacity. With a sole proprietorship, your business is "you". As a result, everything you own (home, car, savings, anything) is 100% at risk for the business debts and liabilities of your Virginia business. In today's litigious society, 1 out of 5 people are sued each year and your chances of being sued are very high. If you run a business, this risk gets even higher. Don't think it will never happen to you. We hope it doesn't happen, but the costs to form and maintain a Virginia LLC or Virginia corporation for running your business are so low now that there is no reason to plan against this risk by using a properly formed and maintained legal entity such as a Virginia LLC or Virginia corporation.

Thie biggest benefit to choosing a legal entity such as a Virginia LLC or Virginia corporation for your business is limited liability protection for yourself and your assets. If you run your business through a properly formed and maintained Virginia LLC or Virginia corporation, you, as the owner will gain significant limited liability protection from the debts, lawsuits and judgments of your business. Other benefits to using a Virginia LLC or Virginia corporation include a more professional business image, a lower risk of tax audit more tax choices and an easier vehicle for succession planning for your business. In addition, it is much easier to raise capital for a Virginia LLC or Virginia corporation because you can issue ownership interests to investors (membership units for an LLC or shares of stock in a corporation). Also, if you ever plan on selling your business, a business is more attractive to buyers when the business is in a legal entity such as a Virginia LLC or Virginia corporation because it is easier to plan to the acquisition and transfer.

Because the sole proprietorship business is not housed in a separate legal business vehicle, the business consists of a bucket of assets, liabilities, and contract obligations. The only way to transfer your sole proprietorship business to a legal entity is to first form a Virginia LLC or Virginia corporation and then transfer all of the assets, contracts and liabilities of the business from yourself to the Virginia LLC or Virginia corporation. The longer you wait to do this, the more difficult it can be because you may have substantial business assets, contracts, bank accounts, etc. Once a Virgina LLC or Virginia corporation is formed, it is a brand new person under the law. Accordinfly, you will need to open new bank accounts for your new Virginia LLC or Virginia corporation and after formation, you will want to start conducting business only in your new legal entity's name. It may take awhile before all of your sole proprietoship business assets are transferred or you may need some time to ensure your customers have been transitioned to the new Virginia LLC or Virginia corporation business. So, please know that this process does not happen overnight and the longer you have been in business as a sole proprietorship, the longer it will take to complete the transition.

A dba is an asset just like any other asset. If you had registered a dba in your own name as part of a sole proprietorship run business and now want a Virginia LLC or Virginia corporation to own and use it, you need to transfer the dba to the Virginia LLC or Virginia corporation. In addition, you will need to make any necessary filings with the local and state agencies where you have registered the dba. Check with your locality to determine the specific requirements for transferring a dba.

Generally, the answer is no. The Virginia LLC or Virginia corporation is a newly formed entity and is separate from your old business. Accordingly, you should set up bank accounts specifically for your new LLC or corporation. Some banks may have a process to make this easier for you, but in all cases, the bank accounts for your new Virginia LLC or Virginia corporation must be under the legal entity's name and not an old sole proprietorship business. If you are transferring your sole proprietorship business to a Virginia LLC or Virginia corporation, just open a new bank account for your new legal entity LLC and then transfer the bank assets from the old account to the new Virginia LLC or corporate account. Once your sole proprietorship business has been totally transferred and the Virginia LLC or Virginia corporationis conducting business, you can wind down the old account. Do not make the mistake of closing it too soon though. During the transition, it is likely you will still get payment to the old business and so be conservative and leave open until you are sure all business has transitioned to the new Virginia LLC or Virginia corporation.