A sole proprietorship
is a business which legally has no separate existence from its owner. Hence, the limitations of liability
that a corporation
provides do not exist for a sole proprietor
. Sole proprietorships can operate in the name of the individual or can have a company name. If the business is operated using a name other than that of the owner, typically, it must register the trade name, or "doing business as
" (DBA) name with the appropriate agency within its jurisdiction -- most likely a city or county.
Sole proprietorship advantages
- Few regulatory requirements compared to corporation
- No corporate tax payments as income is treated as individual income tax
- Small formation costs (few legal fees)
Sole proprietorship disadvantage
- Personal liability for the debts and obligations of the business.
- Typically, outside investors will not invest in a sole proprietorship
This entry includes content from the following Wikipedia article: Sole Proprietorship