Sole Proprietorship Overview
A sole proprietorship is owned and run by one individual. There is no legal distinction between the owner and the business. As a sole proprietor, you have complete control over running the business. It is not necessary to register as a sole proprietor. There is no division between the owner and business, so the owner is responsible for actions of the business.
Tax Considerations
As a sole proprietor, your income and expenses should be reported on Schedule C. You’ll pay self-employment taxes like Social Security and Medicare. Your “pay” is the profit the business makes.
Starting a Sole Proprietorship
If you want to start a small or home-based business, a sole proprietorship may be the best fit. It is the easiest and fastest way to begin. Maybe you want to freelance or sell a product while keeping your job.
Key Considerations for Sole Proprietorships
Sole proprietorships have benefits and drawbacks. It is important for a would-be entrepreneur to consider these factors to ensure they decide on the suitable business structure for the company.