A Sole Proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure. The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does not have separate legal status from the business. If you are a sole proprietor, you also assume all the risks of the business. The risks extend even to your personal property and assets.

What are the advantages of a sole proprietorship:

Its simple structure and your autonomy are among the greatest advantages of running a sole proprietorship, but there are more perks:

  1. They’re easy and inexpensive to set up
  2. You’ll have direct control of decision-making
  3. Minimal working capital usually required
  4. There are some tax advantages, such as expenses and losses offsetting your income
  5. All profits go to you, the business owner

What are the disadvantages of a sole proprietorship:

The main disadvantages result from the lack of a corporation or partnership to help assume your business’s risk:

  1. No corporation to assume liability risk so any claims may have to be paid from your personal assets
  2. As the business owner, you’re responsible for all debts
  3. Inability to sell equity in the business makes it difficult to raise capital
  4. Harder to sell or transfer your business to others when it’s solely dependent on your involvement