A
sole proprietorship is a business organization that is unincorporated
and has only one owner. A sole proprietor (sole owner) has unlimited
liability. Schedule C of Form 1040 is used to report income and
expenses of a sole proprietorship.
Advantages:
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A sole proprietor has complete control and decision-making power over the business.
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Sale or transfer can take place at the discretion of the sole proprietor.
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No corporate tax payments.
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Minimal legal costs to forming a sole proprietorship.
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Few formal business requirements.
Disadvantages:
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The
sole proprietor of the business can be held personally liable for the
debts and obligations of the business. Additionally, this risk extends
to any liabilities incurred as a result of acts committed by employees
of the company.
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All responsibilities and business decisions fall on the shoulders of the sole proprietor.
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Investors won’t usually invest in sole proprietorship
