4 Ways Sole Proprietors Can Protect Themselves Without an LLC

June 7, 2026

By Nadia Cabrera-Mazzeo, Esq.

If you’re a sole proprietor, that is, someone doing business without a formal business entity like an LLC or corporation, you may be tired of hearing that you should get an LLC. Yes, LLCs provide liability protection, meaning the business owner won’t be personally responsible for the debts of the business. But you’re well within your right to choose not to go that route. That doesn’t mean you can’t protect yourself and reduce your liability in other ways.

Here are 4 ways a sole proprietor can protect themselves without forming an LLC.

1   An EIN

An employer identification number (EIN) is like a social security number for businesses. Sometimes, an EIN is required even for sole proprietorships, like if the business has employees. But when it’s not required, sole proprietors can, and maybe should, get an EIN. You know all those W-9 forms you fill out with your social security number? If you get an EIN, you can use the EIN on those forms and keep your social security number private. An EIN can also allow sole proprietors to access business lines of credit and other benefits. Here’s an entire blog post I wrote about EINs with more information.

2   Business Insurance

Insurance is often the first line of defense when something goes wrong. Business insurance typically covers things like property damage or theft, employee-related issues, and legal claims. If your business gets sued, your first call will be to your insurance company which may cover all the legal costs of defending the claim against you. Business insurance policies vary depending on
the industry and type of policy, but it is well worth looking into it, especially for sole proprietors who may otherwise have to pay out of pocket for losses.

3   Contracts & Documentation

Contracts are an important way to set clear expectations with the people you work with and make sure that you won’t be held responsible for more than you signed up for. Beyond setting clear expectations, a well-written contract can also provide legal protection. In any case, proper documentation is essential to clarify any misunderstandings or prove your position if there is a dispute.

Documentation can look like:

    Order slips/ receipts/ confirmations/ written follow-ups stating exactly what you’reproviding to the other party;

    Texting or emailing the other party a summary of your verbal conversation to make sure you’re on the same page;

    Clearly closing out a matter when you’re finished providing services;

    Tracking and making note of when orders were delivered and where they were delivered to;

    Formally writing down the result of an important conversation with an employee, contractor, or other party (bonus points if you send it to them and get their acknowledgment).

These are just some examples of documentation in day-to-day business operations. Even if you could rely on memory, that will serve you very little if something goes wrong and you need to provide proof. Documentation is its own type of insurance against people misrepresenting agreements or just plain-old mistakes.

4   Copyright

Did you know you can use the © symbol even without registering a work for copyright? Just using the symbol with the year the work was created can provide some benefit by documenting when the work was created and by whom. You can enforce intellectual property rights to a certain degree without registering the work for copyright. But works registered with the U.S. Copyright Office carry more protection and enforcement power, giving the creator access to special damages (money awards) in case of infringement. Generally speaking, copyright means a creator has a right to control how and when a work is copied or reproduced. In most cases, a registered copyright is good for the creator’s lifetime plus 70 years. Copyright goes beyond artistic works. If you create educational materials as part of your business, like unique guides, worksheets, presentations, etc., you could benefit from copyright law. At the very least, you can put the © symbol and the year you created the work on the materials to signal that the work is your intellectual property.

(Note: This is different than trademarks. You cannot use the registered trademark ® symbol unless your trademark application was approved by the U.S. Patent and Trademark Office.)

Law office of Nadia Cabrera-Mazzeo, Esq.

Small business and contracts lawyer

Based in Taos, serving clients throughout New Mexico

505 427 2025

nadia@honestcontracts.com

The information on this website is not legal advice and does not create an attorney-client relationship. The rates and fees listed on this website may not be the most up to date.