What is a sole proprietorship?
You will need to know the type of business structure you want before applying for a license through your state. A sole proprietorship according to the SBA “is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities”. The reason I have chosen sole proprietorship over the other forms of business is simple, I like to be in control. I know that I control whether or not the business succeeds, if we fail, I know why. I personally feel like this is the best place for any small business to start and the opportunity to grow allows for changes in the business structure in the future.
There are many advantages for sole proprietors, which are:
1. Financially, the owner does not share profit with anyone else.
2. The sole proprietor is in complete control, you make the rules!
3. Taxes are easily computed, this is the easiest form of structure.
4. The owner can feel strongly about making a successful business based solely on their decisions and sacrifices.
Some disadvantages are:
1. Liability, liability, liability!!! The company rest on you as an individual, therefore protect yourself with insurance and be careful of scams.
2. The owner can get burnt out from not having help.
3. Employees are not protected if owner can no longer perform company obligations.
4. Banks will not loan as much capital as corporations and if default occurs, the owner can be sued.
A sole proprietorship is the most popular type of business structure, but may not work for everyone. I am the type of person that needs to have control over my venture and would not be willing to give up ownership to others. If you are new to entrepreneurship or looking to start a business, weigh the pros and cons and decide what is best for you. Keep in mind the type of business and risks involved.
For additional information check out the United States Small Business Administration https://www.sba.gov/starting-business/choose-your-business-structure/limited-liability-company