Sole Proprietorship A sole proprietorship is an unincorporated business owned by one person. It is the simplest and most common type of business. It is attractive to a business owner because it is simple and offers the owner the freedom to make the business decisions and keep all of the profits. That may also serve as a draw back because the owner has to rely on themself for capital, knowledge and liability. A sole proprietorship does not need to meet any requirements to start. It is not required to register as a business unless it operates under a fictitious name (DBA), or provides services or supplies.
-Liability- The proprietor is personally responsible for all of the business’s liabilities. They have no legal protection if the business fails. Creditors may pursue the owner personally for repayment. The owner may be sued personally as well. -Income Taxes- The sole proprietor will file their taxes for the company and themselves on a 1040 with a schedule C on their personal taxes. All profits and expenses belong to the owner personally.
-Continuity- Unless stated in the owners will and planned ahead for, then the business will end if something detrimental were to happen to the business owner. It is important to have life insurance so the business owner’s family will not suffer from the loss of income.
-Control- One tremendous benefit of sole proprietorship is the business owner’s control of the business decisions. They get to make all of the decisions that affect the business.
-Profit Retention- Another attractive benefit of sole proprietorship is that the owner does not have to share any of the net gains of the business.
-Location- A sole proprietorship is generally small and run by the owner. They must follow the laws of the state in which they operate.
-Convenience or Burden- A sole proprietorship is simple and needs very little paperwork to get started. It may be difficult for the proprietor to