By Casey · Last updated: 2026-05-28 · One Person Company

How to Legally Set Up a One Person Company in a Weekend

You can set up a legally sound one person company in a weekend. Most people overthink this and stall for months. They research LLCs for six weeks, read every Reddit thread, ask five different people what entity to form, and somehow still haven't filed anything.

Don't be that person.

Here's the truth: the legal setup for a one person company is simpler than you think. LLC formation takes an hour. Business banking takes 15 minutes. Insurance takes two hours if you're thorough. The contracts you need fit on a single page each.

What actually matters isn't the paperwork — it's setting up the structure correctly so that when you start making real money (and you will), your personal assets are protected, your taxes aren't a disaster, and a single angry client can't blow up your entire life.

This guide walks through every step. US-focused with international notes for UK, EU, Canada, Australia, and Singapore operators. No fluff. No legalese. Just the checklist I wish someone had handed me on day one.

Let's build the foundation. Then you can get back to actually building the business.

Step 1: Choose Your Entity (Sole Proprietorship vs LLC vs S-Corp)

This is the decision that paralyzes people. It shouldn't. Here's the decision in 90 seconds:

Sole Proprietorship: The Default (and Why It's Dangerous)

If you start doing business without forming an entity, congratulations — you're a sole proprietor. It's automatic. No paperwork required. You report business income on your personal tax return via Schedule C.

The problem: there is zero separation between you and the business. If a client sues you, they're suing you. Your house. Your savings. Your personal bank account. Everything is on the table.

Sole proprietorship is fine for validating an idea for a month or two. It is not fine once real money is moving. Upgrade as soon as you have paying clients.

LLC: The Sweet Spot for One Person Companies

The Limited Liability Company is the default choice for solo operators, and for good reason. It creates a legal wall between your business assets and personal assets. It's relatively cheap to form and maintain. It's flexible on taxes. And it signals to clients and banks that you're a real business.

Single-member LLCs (what you'll form) are treated as "disregarded entities" by the IRS — meaning your business income still flows to your personal tax return via Schedule C. Same tax simplicity as a sole proprietorship, but with the liability shield.

A few things the LLC structure unlocks:

• Business bank accounts — most banks won't open a business account for a sole proprietor without an EIN and formation docs
• Business credit cards — build business credit separate from personal credit
• Client confidence — B2B clients expect to contract with an entity, not a person
• Payment processor requirements — Stripe and others increasingly require business entity verification
• Asset protection — if the business gets sued, your personal assets are (generally) shielded

S-Corp Election: When to Upgrade

An S-Corp isn't a different entity type — it's a tax election you make on top of your LLC. The benefit: you split your income into a "reasonable salary" (subject to payroll taxes) and "distributions" (not subject to self-employment tax).

When it makes sense: net profit of $80K+ per year. Below that, the payroll costs and extra accounting usually eat the tax savings.

Example math: if your LLC nets $120K, you might pay yourself a $70K salary and take $50K as distributions. The $50K in distributions avoids the 15.3% self-employment tax — saving you roughly $7,650/year. Your CPA or accountant handles the payroll filings.

Start as an LLC. File the S-Corp election later when your CPA tells you the numbers work. Don't optimize for taxes before you have revenue to tax.

Delaware vs Wyoming vs Your Home State

Short answer: form in your home state.

Delaware and Wyoming LLCs are popular in startup circles because of business-friendly courts and privacy protections. But here's what nobody tells you: if you live and work in California, Texas, or any other state, you'll need to register your Delaware LLC as a "foreign LLC" in your home state anyway. Now you're paying fees in two states, filing two annual reports, and maintaining registered agents in two states.

The "Delaware advantage" matters for venture-backed startups that might go public. It does not matter for a one person company. Form where you live. Save the headache.

Exception: if you're fully nomadic with no state residency, Wyoming offers strong privacy protections and low fees. But that's a narrow use case — talk to a professional.

Step 2: Register the LLC

Here's the actual step-by-step. This takes about an hour.

2.1 Pick a Name

Your LLC name must be unique in your state and include "LLC," "L.L.C.," or "Limited Liability Company." Most states let you search name availability online in seconds.

Tips:

• Don't name it after yourself unless you're building a personal brand. You might want to sell the business someday.
• Check domain availability at the same time. Your LLC name and domain don't need to match exactly, but it helps.
• Avoid names that are hard to spell or pronounce. Clients will type it wrong.
• Reserve the name if you're not filing immediately — most states let you hold a name for 30-120 days for $10-$50.

2.2 Choose a Registered Agent

Every LLC needs a registered agent: a person or company with a physical address in your formation state who receives legal documents and government notices during business hours.

You can be your own registered agent. Most operators don't. Here's why: the registered agent's address becomes public record. If you use your home address, it's permanently searchable. For $50-$150/year, a registered agent service keeps your address private and ensures you never miss a service of process.

Recommended services: Northwest Registered Agent ($125/year), ZenBusiness ($99/year), LegalZoom ($299/year — overpriced for what it is).

2.3 File Articles of Organization

This is the actual formation document. You file it with your state's Secretary of State office (or equivalent). Most states have online filing portals that process in 1-3 business days.

What you'll need:

• LLC name
• Business purpose (keep it broad: "any lawful business activity")
• Registered agent name and address
• Your name and address as organizer
• Management structure (member-managed for single-member LLCs)
• Filing fee ($50-$800 depending on state)

2.4 Get Your EIN (Employer Identification Number)

The EIN is your business's tax ID — like a Social Security number for your company. You need it to open a bank account, file taxes, and hire contractors (even if you never hire employees).

How to get it: Go to IRS.gov EIN assistant. It's free and takes 10 minutes. You'll get your EIN instantly as a PDF. Don't pay a service $79 for this — it's literally free from the IRS.

You'll need: your LLC approval from the state, your SSN, and your business address. International founders without an SSN can apply using Form SS-4 by fax — it takes 4-6 weeks.

2.5 Formation Services vs DIY

You have three options:

• DIY: Go to your state's Secretary of State website and file directly. Cheapest option. Takes about an hour per state. You handle registered agent, EIN, and everything else yourself. Best if you're comfortable with forms and want to save $200-$500.
• Formation service: Companies like Northwest Registered Agent ($225+state fees), ZenBusiness ($199+state fees), or Bizee (starts at $0+state fees). They file the paperwork, provide a registered agent for the first year, and bundle in an operating agreement template. Worth it for first-timers.
• Lawyer: $800-$2,500. Only necessary if you have a complex structure (multiple members, international, regulated industry). Overkill for single-member LLCs.

Most OPC operators pick option 2 for the first LLC formation, then go DIY for any additional entities. The $200 premium buys you peace of mind that nothing was filed incorrectly.

Step 3: Business Banking

Do not use your personal bank account for business. I'll say it again because it's the most common and most expensive mistake new operators make: do not commingle funds.

If you mix personal and business money, a court can "pierce the corporate veil" — meaning your LLC's liability protection disappears. The plaintiff can go after your personal assets because you didn't treat the business as a separate entity. This is law school 101 and it happens to real people every year.

3.1 Open a Business Checking Account

You need a dedicated business checking account. The good news: digital banks have made this absurdly easy. You can open an account in 15 minutes from your couch.

Mercury is the default recommendation for most OPC operators. It's built for startups and small businesses, has no fees, and the interface is clean. Novo edges ahead if you do a lot of invoicing. Traditional banks (Chase, Wells Fargo) only make sense if you regularly handle cash or need in-person services.

What you'll need to open an account: EIN, LLC formation documents, your personal ID, and sometimes a business website or brief description of what you do.

3.2 Business Credit Card

Separate your spending from day one. A business credit card builds business credit history (separate from personal credit), simplifies expense tracking, and often comes with higher limits than personal cards.

Top picks for OPCs:

• Chase Ink Business Unlimited: 1.5% cash back on everything, no annual fee, solid intro bonus
• American Express Blue Business Cash: 2% cash back up to $50K/year, no annual fee
• Brex: No personal guarantee required (rare), built-in expense management, designed for startups
• Ramp: 1.5% cash back, no fees, real-time spend controls, integrates with accounting software

Use the business card for everything business-related: software subscriptions, contractor payments, ads, travel, meals with clients. Your accountant will thank you. Your tax prep will take half the time.

3.3 The "Profit First" Setup

Implement a simple account structure from day one:

1. Operating Account: All revenue lands here. All expenses paid from here.
2. Tax Reserve Account: Transfer 25-30% of every payment here immediately. Do not touch it. This is the IRS's money, not yours. See our tax planning guide for the exact percentages.
3. Owner's Pay Account: Your personal "paycheck." Transfer a fixed amount monthly from the operating account.
4. Profit Account: Surplus beyond your salary. This is your bonus, reinvestment fund, and rainy-day cushion.

This sounds like overkill for a solo operator. It's not. It's the single best system for never being surprised by a tax bill. Most banks (Novo especially) let you create sub-accounts or "envelopes" for exactly this purpose.

Step 4: Insurance

Insurance for a one person company is cheap — and it's the difference between a lawsuit being annoying vs being catastrophic. Most OPC operators spend $50-$150/month total. That's less than your software subscriptions.

4.1 General Liability Insurance

What it covers: Third-party bodily injury, property damage, and personal injury (libel, slander). If a client visits your home office and trips on a cable, or if you accidentally damage a client's equipment — this covers it.

Do you need it? Yes, if you ever meet clients in person, work on client sites, or have a physical workspace. Even if you're fully remote, many client contracts require it.

Cost: $25-$50/month for $1M-$2M in coverage. Providers: Hiscox, Next Insurance, Thimble, biBERK.

4.2 Professional Liability / Errors & Omissions (E&O)

What it covers: Claims that your professional advice or service caused a client financial harm. Missed a deadline that cost a client money? Made a mistake in a deliverable? Client claims your work was negligent? E&O covers legal defense and settlements.

Do you need it? Yes. If you're a consultant, designer, developer, writer, coach, or any kind of professional service provider, this is your most important coverage. A single unhappy client claiming your advice cost them $50K can wipe out an uninsured solo operator.

Cost: $50-$100/month for $500K-$1M in coverage. The price varies by industry — consultants pay less, developers in regulated industries pay more.

Providers: Hiscox (best overall for small businesses), biBERK (Berkshire Hathaway-backed, good rates), Embroker (tech-focused).

4.3 Cyber Liability Insurance

What it covers: Data breaches, hacking, ransomware, and unauthorized access to client data. Covers legal fees, notification costs, credit monitoring for affected parties, and PR/crisis management.

Do you need it? If you store, process, or transmit any client data — yes. That includes email addresses, payment information, project files, and login credentials. If your laptop gets stolen with client data on it, you're liable.

Cost: $30-$75/month for $250K-$500K in coverage. Often bundled with general liability or E&O policies.

Providers: Coalition (cyber-first insurer), At-Bay, Hiscox cyber add-on.

4.4 When You Can Skip Insurance (Honestly)

If you're pre-revenue, building a product with no clients yet, and have no client data to protect — you can delay insurance. But the moment you sign a client contract, get at least general liability + E&O in place. The cost is small. The exposure is not.

4.5 How to Buy Insurance in Under 2 Hours

1. Go to Hiscox or Next Insurance
2. Select "General Liability" + "Professional Liability" bundled (most offer a discount)
3. Answer the questions about your industry, revenue, and services
4. Get a quote instantly — online, no phone call required
5. Compare with one other provider (biBERK or Thimble)
6. Buy the better quote. You're done.

Seriously, it's that fast now. The days of calling an insurance broker and waiting three days for a quote are over for small businesses.

Step 5: Contracts & Legal Documents

You don't need a lawyer to draft every document. You need the right templates, customized for your business, reviewed once by a professional if you can afford it. Here's what you actually need:

5.1 LLC Operating Agreement

Even though you're the only member, you need an operating agreement. It's the document that proves your LLC is a separate legal entity — not just you operating under a different name. If you're ever sued, the plaintiff's first move is to argue your LLC isn't real and should be disregarded. The operating agreement is your defense.

What it covers: ownership structure, management, capital contributions, profit/loss allocation, what happens if you die or become incapacitated, dissolution process.

How to get one: Your formation service probably included a template. If not, Rocket Lawyer and Northwest Registered Agent offer single-member LLC operating agreement templates for $40-$100. Fill in the blanks, sign it, keep it with your formation documents.

See our legal checklist guide for the full document inventory every OPC needs.

5.2 Client Services Agreement

This is the contract you send before starting any client work. It doesn't need to be 20 pages. It needs to cover:

• Scope of work: Exactly what you're delivering. Not "website redesign" — "5-page website redesign including home, about, services, contact, and blog pages with Figma mockups and two revision rounds." Specificity is your best friend.
• Payment terms: Amount, schedule (50% upfront is standard for project work), invoicing cadence, late payment penalties.
• IP ownership: Who owns the work product? Typically transfers to the client upon full payment. Spell this out.
• Limitation of liability: Caps your liability at the fees paid. Standard and expected in B2B contracts.
• Termination: How either party can end the engagement, notice period, and what happens to work-in-progress.
• Governing law: Which state's laws apply. Use your home state.

Where to get a template: Our contract templates guide has ready-to-use versions you can customize. Alternatively, Hello Bonsai and Indy offer solicitor-reviewed contract templates included in their subscription.

Every horror story about "the client didn't pay" or "they kept asking for more work" starts with a vague contract. A clear scope of work is worth more than any lawyer.

5.3 Independent Contractor Agreement

If you hire contractors — designers, developers, VAs, writers — you need a contractor agreement. It establishes that they're independent contractors (not employees — critical for tax purposes), defines deliverables and payment, and assigns IP rights to you.

Without an IP assignment clause, the contractor technically owns the work they create for you — even if you paid for it. Fix this before they start work.

5.4 Website Privacy Policy & Terms of Service

If your business has a website (it does), you need a privacy policy. It's legally required in most jurisdictions and it's what regulators look for first.

Privacy policy covers: what data you collect, how you use it, who you share it with, cookie usage, and user rights under GDPR/CCPA.

Terms of service covers: rules for using your site, IP ownership of your content, disclaimers, limitation of liability.

Free generators: Termly, Iubenda, GetTerms all offer free privacy policy and TOS generators. Customize the output for your specific business. If you handle sensitive data (health, financial), have a lawyer review it.

5.5 Document Storage & Maintenance

Keep everything in one place. Create a "Legal" folder in Google Drive or whatever you use. Subfolders: Formation, Contracts, Insurance, Tax Filings, IP/Trademarks. When something happens — an audit, a lawsuit, a client dispute — you'll find what you need in 30 seconds instead of three days.

Step 6: Tax Structure

Taxes are the part everyone dreads. But for a one person company, the tax system is actually straightforward if you set it up correctly from the start.

6.1 How LLCs Are Taxed

A single-member LLC is a "disregarded entity" for tax purposes. The IRS treats it like a sole proprietorship: business income and expenses flow to your personal tax return via Schedule C. You pay income tax + self-employment tax (15.3% — Social Security + Medicare) on your net profit.

Key point: the LLC itself does not pay taxes. You pay taxes as an individual on the business's profit. This is called "pass-through taxation" and it's the default for single-member LLCs.

6.2 Quarterly Estimated Taxes

The US is a pay-as-you-go system. If you expect to owe more than $1,000 in taxes for the year, you must make quarterly estimated tax payments. Waiting until April to pay everything at once triggers penalties and interest.

Payment schedule:

• Q1 (Jan–Mar): Due April 15
• Q2 (Apr–May): Due June 15
• Q3 (Jun–Aug): Due September 15
• Q4 (Sep–Dec): Due January 15 (following year)

How much to pay: Set aside 25-30% of every dollar of profit. If you net $10K in Q1, send the IRS $2,500-$3,000. Pay online at IRS.gov/payments. For the detailed breakdown on exactly how much to set aside at every income level, see our tax planning guide.

6.3 Business Deductions Every OPC Should Take

Don't leave money on the table. The tax code rewards business owners who document their expenses. Common deductions for solo operators:

• Home office deduction: If you have a dedicated space used exclusively for business. Simplified method: $5/sq ft up to 300 sq ft ($1,500 max). Regular method: percentage of actual expenses (rent, utilities, internet).
• Equipment and software: Laptops, monitors, phones, SaaS subscriptions, AI tools (Cursor, ChatGPT, Claude).
• Internet and phone: Percentage of business use. Be honest — don't deduct 100% unless it's truly 100% business.
• Health insurance premiums: Deductible for self-employed individuals if you're not eligible for an employer plan through a spouse.
• Retirement contributions: SEP IRA or Solo 401(k) contributions reduce taxable income while building your future.
• Professional services: Accountant, lawyer, business coach, contractors.
• Marketing and advertising: Ads, website hosting, domain, email marketing tools.
• Travel and meals: Business travel, 50% of business meals (100% for 2026 in some cases — check current rules).
• Education: Courses, books, conferences directly related to your business.
• Bank fees and payment processing: Stripe fees, bank charges, credit card annual fees.

The golden rule of deductions: ordinary and necessary. If an expense is common in your industry and helpful for your business, it's deductible. Keep receipts. A good accounting tool (see below) makes this automatic.

6.4 Accountant vs DIY Tax Filing

My recommendation: start with DIY bookkeeping (Bench, Pilot, or QuickBooks Solopreneur) and hire a CPA for tax filing only. The CPA ensures you don't miss deductions and handles the actual filing. Costs $500-$1,000 for tax prep. You do the monthly categorization. Best balance of cost and protection.

For the full tax strategy — including exactly when to make the S-Corp election, state-specific tax traps, and how to structure deductions for maximum benefit — read our complete tax planning guide.

6.5 Sales Tax Considerations

If you sell physical products, digital products, or SaaS, you may need to collect and remit sales tax. Rules vary wildly by state and by product type. Digital products are taxed in some states, exempt in others. SaaS faces its own rules.

Tools that handle this: TaxJar, Avalara, or your payment processor (Stripe Tax, Paddle). Don't try to track this manually — the liability for uncollected sales tax can be substantial. Most OPC operators selling digital products use a merchant of record (Paddle, Lemon Squeezy, Gumroad) which handles sales tax globally.

Step 7: International Considerations

The legal setup for a one person company varies significantly outside the US. Here's the quick version for major jurisdictions:

United Kingdom

Entity: Set up as a "sole trader" initially (register with HMRC, free). Upgrade to a Limited Company (Ltd) once revenue crosses £30K-£50K — it limits personal liability and is often more tax-efficient. Ltd formation costs £12 online through Companies House. You'll need a registered office address (can use a service for £20-£50/year). Banking: Tide, Starling, Monzo Business, or Revolut Business — all free, all online. Tax: Self Assessment filed annually, payments on account due twice yearly. Corporation tax for Ltd companies. VAT registration required above £90K turnover. Insurance: Professional indemnity insurance is essential (£15-£30/month from Hiscox UK, Simply Business). Public liability if you work on-site.

European Union

Entity: Varies by country. Most operators start as self-employed/"freelancer" and upgrade to a limited liability entity (GmbH in Germany, SARL in France, BV in Netherlands, SL in Spain) once revenue justifies the setup costs (typically €1,000-€3,000). Estonia's e-Residency program lets non-residents form an EU company (OÜ) entirely online — popular with digital nomads. Banking: Wise Business, Revolut Business, N26 Business. Tax: Highly country-specific. VAT (usually 19-25%) is the biggest operational burden — register early if you approach thresholds. Insurance: Professional liability required in many EU countries for certain professions. Costs €200-€600/year typically.

Canada

Entity: Start as a sole proprietor. Incorporate federally or provincially once revenue crosses CAD $60K-$80K — incorporation costs CAD $200-$400 federally. Canadian-Controlled Private Corporations (CCPCs) benefit from the small business deduction (reduced tax rate on first CAD $500K of active business income). Banking: RBC, TD, or BMO digital business accounts. Online-only: Wise Business, Vault. Tax: GST/HST registration required at CAD $30K revenue. Quarterly installments for incorporated businesses. Insurance: Professional liability through providers like Zensurance or APOLLO; CAD $30-$80/month.

Australia

Entity: Apply for an Australian Business Number (ABN) — free, instant online. Operate as a sole trader initially. Upgrade to a Pty Ltd company (costs AUD $500-$800 through ASIC) for liability protection and tax planning. Banking: Wise Business, Airwallex, or traditional (CommBank, NAB). Tax: GST registration required at AUD $75K turnover. PAYG installments quarterly. Personal services income (PSI) rules can limit deductions — understand these before structuring. Insurance: Professional indemnity (AUD $40-$100/month), public liability if client-facing.

Singapore

Entity: Must register with ACRA. Sole proprietorship (~SGD $100) or Private Limited Company (~SGD $315). Pte Ltd is preferred for liability protection and tax benefits. Requires at least one director who is ordinarily resident in Singapore (can be yourself or a nominee service). Banking: DBS, OCBC digital business accounts; Wise Business for multi-currency. Tax: Corporate tax at 17% on profits, but effective rate is lower with exemptions. No capital gains tax. GST registration at SGD $1M turnover. Insurance: Professional indemnity common for service businesses; SGD $300-$800/year.

General international note: If you operate globally or serve clients across borders, understand where you're "tax resident." Most countries tax worldwide income of residents. The US is unique in taxing citizens regardless of residence. If in doubt, spend an hour with a cross-border tax specialist — it's the best $300 you'll spend all year.

Common Mistakes That Cost Solo Operators Thousands

I've seen these mistakes destroy one person companies. Every one is avoidable:

1. Commingling Personal and Business Funds

This is the big one. Using your personal checking account for business, paying for groceries from your business account, not tracking owner's draws. Consequences: IRS audit risk, pierced corporate veil (loss of liability protection), accounting nightmare, and tax filings that take weeks instead of hours. Fix: separate accounts from day one. Transfer a set amount to personal as "owner's pay" — don't dip into the business account randomly.

2. Operating Without Contracts

Handshake deals with clients. Emails that loosely define scope. Starting work before the contract is signed. When the client ghosts on a $15K invoice or demands three extra rounds of revisions because "you said you'd make it perfect," you have nothing to enforce. Fix: never start work without a signed agreement. Even a one-page scope document is infinitely better than nothing. See our contract templates.

3. Choosing the Wrong Entity (or None at All)

Operating as a sole proprietor with $100K+ in revenue. Or forming an LLC and immediately filing an S-Corp election without understanding the payroll requirements. Or forming in Delaware when you live in California (double the fees, double the paperwork). Fix: start with a single-member LLC in your home state. Upgrade tax structure when your CPA tells you the numbers work. Don't optimize prematurely.

4. Ignoring Quarterly Estimated Taxes

The penalty for underpayment of estimated taxes is currently around 7% (it fluctuates with interest rates). On a $30K tax bill, that's $2,100 in unnecessary penalties — plus the stress of a massive April payment you didn't plan for. Fix: set aside 25-30% of every payment received. Pay the IRS quarterly. Automate it with your bank's recurring transfer feature. Our tax planning guide has the exact system.

5. Not Separating IP Ownership

Assuming you own the work contractors create for you without a written IP assignment clause. Or not registering your trademark and discovering two years later that someone else filed first. Fix: IP assignment clause in every contractor agreement. Register your business name as a trademark (USPTO, $250-$350 per class) if your brand has any value.

6. Skipping Insurance

"I'll get it when I'm bigger." "It won't happen to me." "My clients are nice people." Until one isn't. A single lawsuit — even a meritless one — costs $10K-$50K to defend. Insurance costs $600-$1,800/year. Do the math. For more on protecting yourself, see our liability protection guide.

7. DIY Legal Work on Complex Issues

Using free contract templates without understanding the clauses. Filing trademarks without a search. Trying to structure an international entity without professional help. Some things are worth paying a professional for. Rule of thumb: if the downside risk exceeds $10K, spend $500-$1,000 getting a professional review.

The Weekend Setup Checklist

Print this. Tape it to your wall. Check boxes as you go. You can complete this in two focused days.

Total estimated cost: $400-$1,500 (depending on state fees, registered agent, insurance, and whether you use a formation service or DIY).

Ongoing annual costs: Registered agent ($50-$150), annual report fee ($0-$800 depending on state), insurance ($600-$1,800), CPA/tax prep ($500-$2,000), bookkeeping software ($200-$600). Budget $2,000-$5,000/year for the full compliance stack. That's less than most people spend on coffee.

Frequently Asked Questions

Do I need an LLC to start a one person company?

No, you can start as a sole proprietor. But once you're generating consistent revenue — especially above $50K/year — an LLC provides liability protection, separates personal and business assets, and unlocks business banking and credit. Most OPC operators form an LLC within the first 6-12 months of generating revenue. The cost is small, the protection is significant. Don't overthink it — just file.

How much does it cost to set up an LLC?

LLC formation costs range from $50 to $800 depending on your state. Delaware costs $90, Wyoming costs $100, California costs $70 plus an $800 annual franchise tax. Using a formation service like Northwest Registered Agent or ZenBusiness adds $100-$300. Total all-in cost: typically $200-$600 for most operators. The EIN is free. The bank account is free. Insurance quotes are free. Don't let the cost be the reason you delay.

Can I use my personal bank account for my one person company?

You can, but you absolutely shouldn't. Commingling personal and business funds is the #1 mistake new OPC operators make — and the #1 way courts pierce the corporate veil and eliminate your LLC's liability protection. It also creates a tax preparation nightmare and makes it impossible to know how your business is actually performing. Open a separate business bank account — it takes 15 minutes with Mercury or Novo and it's free.

What insurance does a one person company actually need?

At minimum: general liability insurance ($25-$50/month). If you give advice or provide professional services, add professional liability / errors & omissions ($50-$100/month). If you handle customer data, add cyber liability ($30-$75/month). Most OPC operators spend $50-$150/month total. This is cheap protection against lawsuits that could wipe out everything you've built. For the full breakdown, see our liability protection guide.

Do I need a registered agent?

Yes — every US LLC requires a registered agent with a physical address in the formation state. You can be your own registered agent, but most operators pay $50-$150/year for a service like Northwest Registered Agent or ZenBusiness. The benefits: privacy (your home address stays off public records), reliability (you never miss legal notices while traveling), and compliance (they track annual report deadlines).

How do I pay taxes as a one person company?

Single-member LLCs are pass-through entities: business income flows to your personal tax return via Schedule C. File quarterly estimated taxes (due April 15, June 15, September 15, January 15). Set aside 25-30% of every payment received for taxes — transfer it to a separate Tax Reserve account immediately. An S-Corp election can save on self-employment tax once you're netting over $80K/year, but it adds payroll complexity. Work with a CPA. Our tax planning guide covers everything in detail.

What contracts do I need?

The essential four: (1) LLC Operating Agreement — proves your LLC is a separate legal entity and defines how it's governed; (2) Client Services Agreement — scope, payment terms, IP ownership, limitation of liability, termination; (3) Independent Contractor Agreement — for any contractors you hire, with IP assignment clause; (4) Website Privacy Policy and Terms of Service — legally required if you have a website. Get templates from our contract templates guide.

Should I form my LLC in Delaware or my home state?

For 99% of one person companies, form in your home state. If you form in Delaware but live and work elsewhere, you'll need to register as a foreign LLC in your home state — doubling your fees and paperwork. The "Delaware advantage" matters for venture-backed startups that may go public or raise institutional capital. It doesn't matter for solo operators. Save the complexity, form where you live.

When should I upgrade from sole proprietor to LLC?

The trigger points: you have paying clients, you're generating $2K+/month in revenue, you're signing contracts, or you want to open a business bank account. If any of these are true, form the LLC. The protection is worth the cost. Operating as a sole proprietor with significant revenue is an unnecessary risk. Most operators file within 3-6 months of going full-time on their business.

What's the biggest legal mistake one person companies make?

The top three: (1) commingling personal and business funds — this is the most common and the most dangerous. It can eliminate your LLC's liability protection in court. (2) Operating without contracts — handshake deals and vague emails don't hold up when a client disputes scope or refuses to pay. (3) Ignoring IP and trademark protection — someone copies your work, your brand, or your content and you have no legal recourse because you never registered anything. Fix these three and you've eliminated 90% of legal risk as a solo operator.

Can I set up a US LLC as a non-US resident?

Yes. Non-US residents can form US LLCs, typically in Delaware, Wyoming, or New Mexico. You'll need a registered agent with a physical US address. An EIN requires filing Form SS-4 by fax (no online option without an SSN/ITIN) — processing takes 4-6 weeks. Banking is the hardest part: Mercury and Relay accept non-US founders from many countries; traditional banks typically require a US presence. You'll also need to understand your home country's tax treatment of US LLCs — some countries (UK, Australia) treat them as transparent entities, others don't. Consult a cross-border tax specialist before filing. Also see our US one person company guide for the full playbook.

Do I need a business license?

Maybe. Business licenses are separate from LLC formation and vary by city, county, and industry. Most online service businesses don't need one, but some localities require a general business license regardless of industry. Check your city's website. Certain professions (lawyers, accountants, architects, healthcare) require state-level professional licenses. If you're selling physical products, you may need a seller's permit. Spend 15 minutes searching "[your city] business license requirements" — it's usually a simple form and a small fee.

Related Guides

• One Person Company Legal Checklist — complete compliance inventory
• Contract Templates for One Person Companies — ready-to-use agreements
• Tax Planning for One Person Companies — deductions, S-Corp, quarterly estimates
• Liability Protection for Solo Operators — insurance, entity structure, asset shielding
• US One Person Company Guide — complete playbook for US-based operators
• One Person Company — the full resource library
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