A sole proprietorship has one owner. This owner has unlimited liability for the business. A sole proprietorship is simple to set up and operate. The owner does not need to share profits. A partnership has two or more owners. Partners share profits and losses. A corporation is separate from shareholders.
Types of Business Structures
- Sole Proprietorship
- Partnership
- Corporation
Advantages of Sole Proprietorship
- Less paperwork to start
- Easier taxes
- Stability
- Single man control
- Liability
The essential characteristics of a sole proprietorship are:
1) Sole ownership
2) One-man control
3) No legal entity
4) Unlimited liability
5) No profit-sharing
6) Small size
7) No legal formalities
Examples of sole proprietorships include writers, consultants, local restaurants and shops. To create it, an individual carries on some profitable activity.