Starting a Small Business at 60+: Sole Proprietor vs LLC, and How to Register
Older Americans launch about a quarter of all new U.S. businesses. Here is how to pick a business structure, register, and handle the first tax steps.
At a Glance
Write a one-page plan before you file any paperwork
~27sPick sole proprietor or LLC based on liability risk
~34sQuick Tip
Quick Tip: General liability insurance ($30 to $50 a month) gives you a layer of protection even as a sole proprietor and is cheaper than running an LLC in many states.
Register with your state (LLC) or county (DBA)
~27sGet your EIN and open a business bank account
~36sWarning
Never pay a service that calls itself IRS-EIN-Help or similar to get your EIN. The IRS provides EINs free of charge. The lookalike services charge $100 to $300 for paperwork you can do in 5 minutes yourself.
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About 25 percent of new U.S. businesses are started by Americans aged 55 and older, according to the Kauffman Foundation. Older entrepreneurs bring decades of professional networks, savings, and skill — and their businesses tend to last longer than those started by 25-year-olds. The catch is the paperwork. Starting a business in the U.S. means picking a legal structure, registering with your state, getting a tax ID, and tracking income for the IRS.
The two most common structures for a one-person business are the sole proprietorship and the single-member LLC (Limited Liability Company). A sole proprietorship is the default — if you start selling without filing anything, you are already a sole proprietor in the eyes of the IRS. You report income on Schedule C of your personal tax return. No state registration is required to exist, but most states require a business license or a fictitious business name filing (often called a DBA, for Doing Business As).
A single-member LLC is created by filing Articles of Organization with your state, usually online, for $50 to $500 depending on the state. The big benefit is liability protection: if your business gets sued, the lawsuit can only reach business assets, not your personal home or retirement accounts (when properly maintained). For tax purposes, a single-member LLC is treated the same as a sole proprietor by default. You still file Schedule C — unless you elect to be taxed as an S corporation.
Most older entrepreneurs picking between the two should think about risk. If your business involves any chance of being sued (handyman work, dog walking, food sales, personal services), an LLC is worth the $200 to $800 a year. If you are selling crafts online or doing remote bookkeeping for friends, a sole proprietorship is enough for the first year.
Every business, regardless of structure, should get an EIN (Employer Identification Number) from the IRS. It is free, takes 5 minutes online at irs.gov/ein, and lets you open a business bank account without using your Social Security number.
(Sources: SBA.gov — Choose a Business Structure; IRS — Apply for an EIN Online; SCORE.org — Senior Entrepreneur Resources)
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