Based on the industry, forming an LLC or a single proprietorship may be advantageous. Small firms with minimal risk and modest earnings are best served by sole ownership. The company will serve a small, focused set of consumers rather than a large number of people. Sole proprietorships typically begin as a hobby and grow into a business. The grounds for forming an LLC are the polar opposite of those listed above. The business comes with some hazards, as well as the potential for very significant earnings, a loyal customer base, as well as the ability to take advantage of specific tax structures.