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Define a Sole Proprietorship: creation, ownership, challenges, concerns

Questions on a Sole Proprietorship

What is one?
Who can I own one?
How do you form positive things and what challenges would you face?
If I want to create a Sole Proprietorship how would I do it?
What would be the best thing to do?
What concerns would you have?
What does it take to create that business organization?
And can I protect it using this particular entity?
What are the positives and negatives?

Solution Preview

What is a Sole Proprietorship?

Simply put, a sole proprietorship is a one-person business that is not registered with the state as a corporation or a limited liability company (LLC). For example, a freelance photographer or writer, a craftsperson who takes jobs on a contract basis, a salesperson who receives only commissions, or an independent contractor who isn't on an employer's regular payroll, are considered a sole proprietorship.

Who can own a Sole Proprietorship?

Anyone may own a sole proprietorship. As stated above, it is a one person business. A person may even own one without knowing it if they are any of the above mentioned in the definition of a SP.

How do you form positive things?

The most appealing advantage of the sole proprietorship as a business structure is the total control the owner has over the business. Subject only to economic considerations and certain legal restrictions, there is total freedom to operate the business however one chooses. Many people feel that this factor alone is enough to overcome the inherent disadvantages in this form of business.

What challenges would you face?

You may have to comply with local registration, business license, or ...

Solution Summary

This solution discusses various questions regarding sole proprietorship and covers the following concepts: creation, ownership, challenges, and concerns.