Sole proprietorship

Usually when entrepreneurs start with a sole proprietorship or with a few partners, they create a sole proprietorship. Depending on your needs you can stay with that type of legal structure for as long as you want, or you can choose to change to another one.

A sole proprietorship usually has only one owner, and of all the ways of structuring businesses legally, it is the simplest and cheapest.

When you create a new venture on your own and do not file paperwork to become a corporation or limited liability company, you automatically become a sole proprietorship.

Advantages and Disadvantages of Sole Proprietorships

Although it is a sole proprietorship and the simplest of all, there are some considerations you must follow. Depending on where you decide to set up your business, the local government may require documents such as licenses or permits.

There may also be regulations regarding the signage you can use in case your business has a physical location. You should keep in mind that these bureaucratic specifics do not enter into the sole proprietorship creation procedure, as this does not actually exist. Advantages:

• Any entrepreneur who is in business actions on its own, is in essence a sole proprietorship. What in this case all the profits will be collected by the owner. The ownership of the business can only be held by a single person or a married couple, no more than that.
• The profit of the business is tied to both the business tax and the self-employment tax, since this type of entrepreneur is self-employed.
• One of the advantages of a sole proprietorship is the ease with which it can be terminated and withdrawn, in case there are no investors or creditors to return their deposit to.

Disadvantages:

• One of the major weaknesses of this type of company is that all the financial and legal responsibilities of the venture also fall on its owner. This means that, in the event of a lawsuit against the company, its owner is directly responsible fo