Sole proprietorship

A sole proprietorship is the easiest, least expensive, and least regulated business legal structure. A sole proprietorship is simply a business that is owned by one person. If you go into business for yourself and do not have any partners, you are considered a sole proprietor. The proprietor personally owns all of the assets of the business and controls its operations.

To establish a sole proprietorship, all you need to do is name the business, get a business license from your city or county, publish a fictitious business name statement in a local newspaper, open a checking account, open your doors, and you are, quite literally, in business.

Advantages of the sole proprietorship:

  • Low start-up cost
  • Ease of formation and running more quickly than with other structures
  • You have total ownership and control of the business
  • You don’t have to share profits with anyone

Disadvantages of the sole proprietorship:

  • Difficulty in raising capital
  • Unlimited liability. The owner of a sole proprietorship is personally responsible for all business debts, obligations, and judgments of the business
  • You must pay self-employment tax on the business net income

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