This website may earn a commission from purchases made through affiliate links.
A sole proprietorship is the easiest way to start your business, however, it is the riskiest type of business formation since the proprietor has unlimited liability. A sole proprietorship is not corporated and does not have the same protection as corporations, however, it is easier for tax purposes.
The business owner of a sole proprietorship becomes responsible for the business's expenses, debts, and even lawsuits if such should arise. Did I mention the business owner of a sole proprietorship is PERSONALLY responsible? This means that your personal bank accounts, assets, investments, and wages are at risk.
Unlike a corporation, there is no legal separation between personal assets and business assets. If the business owner neglects to pay off a business loan or other obligations, creditors may have the right to help themselves to assets, personal or business, for payment.
If you are starting a business or thinking of starting one, consider forming a limited liability company to protect you and your personal assets. If you already have a sole proprietorship, it's not too late!
Stay tuned for a comprehensive list of different types of limited liability companies and corporations.
I write about empowering women to achieve their professional and personal goals. With years of experience, I am passionate about providing insights and guidance to help you become the best version of yourself.
Are you loving the content on our blog? Our weekly newsletter is packed with insights and tips to help your small business grow and succeed. Sign up here.
