A sole proprietorship is owned and operated by one person. Over 75% of all businesses are sole proprietorships. They are popular among individual business owners, contractors, and consultants.
Liability and Control
The most significant disadvantage is no liability protection. Every business liability is a personal liability. While owners have full control and flexibility, they also have complete personal liability.
Ease of Setup
Setting up a sole proprietorship is easy and affordable. There’s little paperwork required. You can start offering services immediately. For some industries, licenses or permits may be needed.
Financial Considerations
Sole proprietors can’t raise capital easily. Banks may hesitate to fund them, seeing high risk. Without a formal structure, convincing investors is hard. Sole proprietorship means single ownership. It suits small enterprises needing personalized service. Sole proprietors have total control but also bear all losses personally.