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What Is a Sole Proprietorship and What Are the Advantages?

When you want to run a business on your own, the Sole Proprietorship is a convenient option. You don’t have to do any legal work to set up your business as a Sole Proprietorship—it happens automatically when you start to do business, so long as you don’t take action to establish a different kind of business. In a Sole Proprietorship, you are the sole owner of the entire business, and you have total control over it. No formalities are required (unless you hire employees or set up a retirement plan, which triggers some record-keeping and tax filing requirements), and dealing with taxes is fairly simple. The main disadvantage of this form of business is that there is no legal distinction between you and the business, leaving you personally liable for any debts or obligations the business may incur, with no limitations and no protection for your personal assets.