Sole Proprietor

Sole Proprietorship Overview

A Sole Proprietorship is the simplest and most common way to run a business. It’s basically you and the business being one and the same — no separation legally, financially, or tax-wise.

What It Is

Single Owner: Just one person in charge of everything.
No Separate Legal Entity: The business is you — there’s no legal wall between personal and business assets.
Simple Setup: Often, you just start operating. At most, you may need a local business license or a DBA (“doing business as” name).

Pros

Easiest and Cheapest to Start
No incorporation paperwork, minimal fees, and very little red tape. You can be up and running in a single afternoon.
Full Control
You make every decision — no partners, board meetings, or voting required.
Simple Taxes
Business income just goes on your personal tax return (Schedule C). No separate business tax filing.
Keep All the Profits
You don’t have to share revenue with partners or investors.
Low Ongoing Compliance
No annual meetings or corporate paperwork to maintain.

Cons

Unlimited Personal Liability
If the business owes money or gets sued, your personal assets — like your home, car, or savings — are at risk.
Harder to Raise Money
No stock or membership units to sell, and banks or investors tend to prefer corporations or LLCs.
Less Credibility
Some vendors, clients, or partners may see a sole proprietorship as less stable or less professional.
Self-Employment Taxes
You’re responsible for Social Security and Medicare taxes on all your net profits.
Business Ends With You
If you stop working or pass away, the business doesn’t continue — it’s tied directly to you.

Bottom Line

A Sole Proprietorship is perfect for freelancers, consultants, or solo entrepreneurs testing the waters, as well as small, low-risk businesses that don’t need outside funding. But as your business grows or takes on more risk, you’ll likely want to upgrade to a C-Corporation to protect your personal assets and create more growth opportunities.