… means being your own boss – your only boss!

A sole pro­pri­etor­ship, also known as a ‘pro­pri­etor­ship’, is a busi­ness ran by one owner. A pro­pri­etor­ship allows no legal dis­tinc­tion between the owner and the busi­ness. All prof­its and all losses accrue to the owner (sub­ject to tax­a­tion). All assets of the busi­ness belong to the owner. Like­wise, all debts of the busi­ness belong to the owner who must pay them from his per­sonal resources. This means that the owner has unlim­ited lia­bil­ity. It is a “sole” pro­pri­etor­ship in the sense that the owner has no part­ners (part­ner­ship). A sole pro­pri­etor may do busi­ness with a trade name other than his or her legal name. This also allows the pro­pri­etor to open a busi­ness account with bank­ing insti­tu­tions.

Advan­tages of a sole proprietorship:

• easy to start up with lit­tle paperwork
• fewer reg­u­la­tions than other busi­ness types
• owner makes busi­ness decisions
• easy to discontinue
• owner is not dou­ble taxed, as is a corporation
• owner can make quick deci­sions unhin­dered by others
• owner has total con­trol of the business
• no ten­sion with partners
• owner takes all the profits.

This is the main rea­son that most busi­nesses are pro­pri­etor­ships. A sole pro­pri­etor­ship is not a cor­po­ra­tion; it does not pay cor­po­rate taxes, but the owner pays self-​employment taxes on the prof­its, mak­ing account­ing much simpler.

Dis­ad­van­tages of a sole proprietorship:

• hard time rais­ing capital
• owner has unlim­ited liability
• all losses accrue to the owner
• owner retains all risk.

As a sole pro­pri­etor­ship becomes suc­cess­ful, the risks tend to grow. To min­i­mize those risks, a sole pro­pri­etor has the option of form­ing a cor­po­ra­tion, or a Lim­ited Lia­bil­ity Com­pany (LLC). –Infor­ma­tion from Wikipedia​.com

If you have a sole pro­pri­etor­ship, how did you decide on that form of own­er­ship? Does this form of busi­ness present any dif­fi­cul­ties for attain­ing suc­cess? If so what advan­tages out weight the dis­ad­van­tage?

Books at Amazon

There are many good books on form­ing a sole pro­pri­etor­ship. We have linked to a few here for you at Ama­zon. We are Ama­zon Asso­ciates and funds derived from the sale of books directly go towards keep­ing this Start Your Busi­ness blog going and pro­vid­ing much needed infor­ma­tion and resources to those seek­ing it.

Sur­pris­ingly Sim­ple: Inde­pen­dent Con­trac­tor, Sole Pro­pri­etor, and LLC Taxes Explained in 100 Pages or Less by Mike Piper (Paper­back — Jul 2009)

Work­ing for Your­self: Law & Taxes for Inde­pen­dent Con­trac­tors, Free­lancers & Con­sul­tants by Stephen Fish­man Attor­ney (Paper­back — Feb 10, 2008)

Ulti­mate Book of Form­ing Corps, LLCs, Part­ner­ships & Sole Pro­pri­etor­ships by Michael Spadac­cini (Paper­back — Mar 15, 2004)

Self-​employed Tax Solu­tions: Quick, Sim­ple, Money-​Saving, Audit-​Proof Tax and Record­keep­ing Basics for the Inde­pen­dent Pro­fes­sional by June Walker (Paper­back — Jan 1, 2005)

Small Busi­ness For Dum­mies (For Dum­mies (Busi­ness & Per­sonal Finance)) by Eric Tyson and Jim Schell (Paper­back — Mar 4, 2008)

HOME BUSINESS TAX DEDUCTIONS: Keep What You Earn by Stephen Fish­man Attor­ney (Paper­back — Dec 8, 2008)

Deduct It! Lower Your Small Busi­ness Taxes by Stephen Fish­man Attor­ney (Paper­back — Dec 8, 2008)