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BUSINESS LAW - Business Entities
Sole Proprietor
Cleverness In This Article
What Is A Sole Proprietor?
Sole Proprietor - Advantages
Sole Proprietor - Disadvantages
What Is A Sole Proprietor?
Sole Proprietor - Advantages

Sole Proprietor
- A sole proprietorship is easy to set up and has little formal paperwork.
- Starting this form of business can be as simple as promoting your new business by putting a sign up announcing your new services or product.
- The business is easy to end.
- A sole proprietorship generally has fewer regulations.
- The business owner keeps all the profits and has the freedom to make all the decisions.
- Income is usually declared on the owner’s individual income tax return.
Sole Proprietor - Disadvantages
- Unlimited liability (See Article 'Limited and Unlimited Liability' for more information).
- This means that the owner of a sole proprietorship is personally responsible for the obligations of the business, including the actions of any employee representing the business.
- The owner is 100% liable for business debts.
- Ownership of proprietorship may be difficult to transfer
- The business may have a limited life as, in most cases, the business dies or stops operating when the business owner does.
- It can be difficult to raise capital especially if the business has not been operating for long and has limited income to show.
- Most business funds come from personal savings or personal loans.
Note: The largest issue with a sole proprietorship is unlimited liability. (See Article 'Limited and Unlimited Liability' for more information).
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