What's the practical difference between a sole proprietor, an LLC, and an S-corp?

They're really two separate questions — legal structure and tax structure. A sole proprietorship is the default when you earn 1099 income with no paperwork; you and the business are legally the same, so your personal assets are exposed. An LLC is a legal wrapper formed at the state level that gives you liability protection and a more professional footing, but by default it's taxed exactly like a sole proprietorship (or a partnership if there are multiple owners). An S-corp isn't an entity at all — it's a tax election an LLC or corporation can make to change how profit is taxed, potentially cutting self-employment tax. So a common path is: start as a sole proprietor, form an LLC for protection, then elect S-corp treatment once profits are high enough to justify it. Map your own situation with wealthserene.com/tools/self-employed-hub.