STARTING A BUSINESS AS A SOLE PROPRIETOR?

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When starting your journey towards becoming a full-time entrepreneur, most of the time we lack the knowledge on which direction to go when it comes to properly structuring our businesses. We are consistently bombarded with everyone's professional input on what's best for us when starting out, but truthfully the best person to ask about which structure would be best for you would be a small business attorney.

Most of the professionals and small business attorneys that we've encountered have told us that they always recommend to their new start-up clients to start small as a sole proprietor because it has the least financial drawbacks. They explained how it's easier to scale up and scale the business as opposed to starting off too large and being way in over your head.

A sole proprietorship, also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work alone and may employ other people.

The distinguishing characteristics of a sole proprietorship are as follows:

• Single ownership: A sole proprietorship is wholly owned by one individual.
• One-man control
• No legal entity
• Unlimited liability
• No profit-sharing
• Small size
• No legal formalities

To start a sole proprietorship, you generally just have to launch your business. It is useful to choose a company name. Depending on your business and local regulations, you may need to apply for a permit or license with your city, county, and/or state. If you plan to hire employees, you will need an employee identification number (EIN) from the Internal Revenue Service (IRS). If you are going to sell taxable products, you will need to register with your state for a sales tax license.

What is an advantage of a sole proprietorship?

Minimal paperwork and low set-up costs are two major benefits of having a sole proprietorship. In addition, there is the ease of maintaining it. In fact, according to the SBA, it's the simplest and least expensive business type you can establish.

Leave us a comment below and let us know how your experience has been since becoming a sole proprietor.