Sole Proprietorship

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Sole Proprietorship

Sole proprietorship is the simplest type of business. A single person is responsible for operating the business and it’s finances. Most sole proprietorships are small businesses that have one employee basically the owner. Forming a sole proprietorship is usually easy. Indeed, in many states it requires no special action. Doing freelance or independent work under your own name is usually enough to form a sole proprietorship, or you can file a DBA (Doing Business As).

The dominant two benefits of structuring your business as a sole proprietorship are:

  1. The simplicity of formation and taxes. Since there usually are no formal steps required to form a sole proprietorship.
  2. There is no cost involved.

In addition, owners of sole proprietorships count the business’ income on their personal income tax returns. The only major disadvantage is that sole proprietorships do not offer any legal protection to their owners.