Sole Trader vs LLC: Which Status to Choose in 2025?

Sole Proprietorship vs Corporation: Which Structure to Choose?

Starting your freelance business and unsure which legal structure to pick? Here's a detailed comparison to help you decide.

Quick comparison

Key differences between Sole Proprietorship and Corporation:

Setup : Simple and free vs Complex (~€300)

Accounting : Basic records vs Full accounting

Charges : 22-25% of revenue vs ~45% of salary

Revenue cap : €77,700 (services) vs Unlimited

VAT : Exemption possible vs Mandatory

Liability : Personal vs Limited to contributions

Unemployment : No vs Yes (under conditions)

Sole Proprietorship: for whom?

Advantages

Set up in 10 minutes

No complex accounting

Charges based on actual revenue

Reduced business tax in year one

Simplified tax payment option

Disadvantages

Revenue cap (€77,700 for services)

No expense deductions

Limited social protection

Personal assets exposed

Ideal for

Side business

Testing a project

Revenue < €50,000/year

Low business expenses

Corporation (SASU): for whom?

Advantages

Limited liability

Expense deductions

Tax optimization (dividends)

Professional image

No revenue cap

Disadvantages

Setup formalities

Mandatory accounting (~€2,000/year)

Higher social charges

Reporting obligations

Ideal for

Revenue > €70,000/year

Significant expenses (office, equipment)

Potential partners

Fundraising planned

How to choose?

Expected revenue < €50k → Sole proprietorship

Expected revenue €50-70k → Calculate precisely

Expected revenue > €70k → Corporation likely

Many expenses → Corporation

Need unemployment benefits → Corporation

Testing a business idea → Sole proprietorship

Conclusion

The right structure depends on your personal situation. Don't hesitate to consult an accountant for a personalized simulation.

With Robi AI, whatever your structure, you can invoice easily and stay compliant!