Sole Proprietorship: This is a type of business is where the business and the owner are one in the same. Sole proprietorship has its advantages and disadvantages just like every form of business. Sole proprietorship is one of the easiest types of business to create. You as the owner can name, organize and carry the business as far as you dream of it going. Sole proprietorship also can have risks; as the owner you cannot bring others into the business, so the responsibility of time management, and carrying the risks of the business is on you.
Liability – There are several liability within sole proprietorship. As the owner you are a liability because you are one person (for example: If you get sick for several days that is revenue that you are losing to pay your bills). Weather is also another liability for your business pertaining to being primarily outside (for example: If weather is bad for weeks that is lost revenue). Lastly sole proprietorship suffers from unlimited liability. If your business is spending more money than it is bring in and your ability to pay debt becomes a problem creditors have the ability acquire personal assets to compensate for the debt.
Income Taxes – Tax planning with sole proprietorship can be very difficult. Since you and the business are one in the same the tax rates depend on the type of income brought in.
Personal income or losses have to be reported and taxed at the highest rate (personal income taxes).
Longevity/Continuity – As I stated earlier sole proprietorship is one of the easiest types of business to create. It is also one of the hardest to acquire money and resources to get started. As quick as it is to get started it is just as easy to end a sole proprietorship. Sole proprietorship cannot be passed on to any other person or family member. Once owner passes away the business passes away with them.
Control – Within a sole proprietorship as the owner you control