A sole proprietorship is the simplest form of business entity. Proprietors enjoy full control and profits from the business. However, they incur unlimited personal liability. Sole proprietorships are easy and inexpensive to start due to few government regulations.
Advantages of a Sole Proprietorship
The main advantage of a sole proprietorship is complete control. The proprietor can provide desired products and services, set their own hours, and charge any price. They also control how to exit the business.
A sole proprietorship’s simplicity and ease of set-up come with low start-up costs. There is maximum privacy and flexibility to change the legal structure if situations change. The business is also easy to wind up.
Disadvantages of a Sole Proprietorship
The main disadvantage is unlimited personal liability. The proprietor is personally responsible for all business and personal taxes and debts.