Why You Should Pick Sole Proprietorship
Why you should pick Sole Proprietorship
There are many aspects to running your own company. You are going to have to decide if you want a partner or you want to run the company alone. There are different forms of legal businesses, like Sole Proprietorship, Partnership, Corporation and Limited Partnership. They all have the aspect of running a business and choosing which one is right for someone starting a new company. When creating something new there are legal forms of business that are needed to be decided on.
Sole proprietorship is the simplest way of starting a business, requiring less paperwork and legal filings when both starting your business, and on an ongoing basis. However, with sole proprietorship, your business is legally indistinguishable from yourself, which means that your personal assets are at risk if you are liable for your business activities.
As a sole proprietor, however, you are your business in a legal sense, so if you lose a lawsuit as a result of your business activities, your personal assets -- including your house and savings -- can be seized to pay off the debt. For this reason, many serial entrepreneurs choose to incorporate any new business venture they start, and you should consider the same if you have substantial personal assets which might be at risk. Even incorporation, however, will not protect your personal assets if you are personally at fault in a legal action; some activities, including fraud and other illegal acts, will make you personally liable regardless of corporate cover. Sole proprietorship is usually preferred because it is simpler, requiring no legal filings to start the business. It is especially suitable if you're planning on starting a one-person business and you don't expect the business to grow beyond yourself.
Sole proprietorships are so easy to set up and maintain that you may already own one without knowing it. For instance, if you are a freelance