Question about sole proprietorship and LLCs
have not registered my business yet and I need some help. I am a Sole Proprietor and I want to be LLC, is business entity still Sole Proprietor when i register with Virginia State Corporation commission? I know that i have to register fictitious name, but will entity still be sole?
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The first thing you need to understand is that sole proprietor is not a business entity, i.e. it provides no separation between the business and the person owning the business. A business operated this way reports taxes on Schedule C of a 1040. A single member LLC reports taxes the same way, but the LLC provides liability protection against business liabilities being attached to personal assets. Registering a fictitious name does not provide any protection for personal assets.
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You're not allowed to make a fictitious name filing with the VCC if you're a sole proprietor. Rather, you need to file a certificate in the Clerk's Office of the circuit court of the jurisdiction (city or county, in VA) in which the fictitious name will be used, and your status as a sole proprietor is unaffected by such a filing. A link to the required form is here:
http://alexandriava.gov/uploadedFiles/clerkofcourt/assumed%20name%20certificate.pdf
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It is hard to imagine a circumstance where you would not want to organize your business as either a corporation (including an S corporation) or a limited liability company (aka an LLC). The advantages are manifold -- liability protection, greater deductability of proper business expenses, stronger market position, etc. A sole proprietorship affords no protections, exposes you to unlimited personal liability and presents your business as a "mom and pop shop" to potential customers.