An excerpt from the Freelance Writer’s Toolkit.
A sole proprietorship is the easiest form of business to start, as there are virtually no legal formalities to complete. In a sole proprietorship the business has only one owner.
The business also does not have a legal identity distinct from the owner, and is therefore considered a personal wealth investment. The owners of a sole proprietorship only have to answer to themselves, but the business will cease to be a legal entity if the owner dies or sells the business.
A sole proprietorship has the ability to borrow funds, but that borrowing status is dependent on the owner’s personal financial status. The owners are personally liable for any defaults or lawsuits, and their personal property can be taken away in the event of a lawsuit.
Profits from a sole proprietorship are not taxed–they are considered as income on the owner’s personal taxes.
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I ran my little doctor practice alone for years. I was the first one there and the last one to leave, but nobody ever fired me.