<prompt> Human: I work as an independent contractor for several companies. Should I set up an LLC, or a sole prop? I dont mind the set up costs for either one. I make about 1,500-2,000 per month. I track all my mileage and expenses already. Im pretty inexperienced as far as taxes and business stuff, so Im trying to learn and figure it all out. It would be great if someone could ELI5 the differences between the 2, pros and cons, how the taxes work, etc. thanks!  <response>: A llc is about protecting personal assets if your business is sued. A llc and sole proprietor are taxed the same way.A llc with a S Corp election is taxed differently, but your arent in the earnings area to benefit from that.So what you need to look at is the liability issue, and if you need an extra layer of protection. 