Why choose a sole proprietorship?
Sole proprietorships are often the results of accidental entrepreneurs and new business owners beginning a business without really intending to start a company. As soon as your enterprise has revenue, it’s a business. With a sole proprietorship, there is no state filing to begin the business. On the flip side, there is no separation between the assets of the business and those of the owner. Therefore the sole proprietor‘s personal assets can be used to satisfy business debts and liabilities.
Advantages of sole proprietorships
Typical advantages of a sole proprietorship include:
- Ease of creation. Owners can establish a sole proprietorship instantly, easily and inexpensively.
- No state paperwork. There is no state filing required to create a sole proprietorship.
- No separate tax filing. There is no separate business income tax filing. Business income or loss is reported on the sole proprietor’s personal tax return, and any tax is paid at the individual level.
- Few ongoing formalities. Sole proprietorships face few, if any, ongoing requirements or formalities, such as state annual report or ownership meeting requirements as with C corporations, S corporations and LLCs.