Sole Proprietorship
How many people can be in a Sole Proprietorship
1 person can own and do a Sole Proprietorship.
Benefits
A sole proprietor need not pay unemployment tax on himself or herself (although he or she must pay unemployment tax on employees).
Disadvantages
Owners are subject to unlimited personal liability for the debt losses liabilities of the business.
Disadvantages
Owners cannot raise capital by selling an interest in the business.
Benefits
Owners have complete control over their business.
Benefits
Sole proprietorship carry little, if any, ongoing formalities.
Disadvantages
Sole proprietorship rarely survive the death or incapacity of their owners and so do not retain value.
What is Sole Proprietorship?
The Sole Proprietorship is the simplest business form under which one can operate a business. The Sole Proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.
How to start a Sole Proprietorship
To be a sole proprietorship, you do not have to take any formal or legal steps at the federal, state, or local level, Weltman says. "As long as you are the only owner, you automatically become a sole proprietorship by conducting business."
Examples
Barbers who own their shops, auto mechanics who are self-employed, a gardener who mows lawns for a fee.
Disadvantages
Hard to raise money in stock because people don't often invest.
Benefits
Owners can establish a sole proprietorship instantly, easily and inexpensively.
