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A sole proprietorship is what your company is by default. If you don’t organize your business in any formal way, you will be considered a sole proprietor. This is the simplest business structure you could choose for your business because there is no business apart from you the proprietor (owner of the business). Essentially all the assets (i.e., items that have a value attached to it) and liabilities (i.e., debt and other responsibilities) of the company are also attached to your personal assets and liabilities. They are seen as one and the same thing in your business.

The nice thing about choosing this business structure is that there isn’t any complicated paperwork to complete. However, many states and municipalities do require that you register your business.

As a sole proprietor, things are pretty simple and easy when it comes to operating, bookkeeping, and taxes. The big drawback to a sole proprietorship is that all your business obligations are also your personal obligations. It means you personally take all the risks and liabilities. If your business owes money, you owe money. There is no separation. Also, as a sole proprietor you won’t have a lot of taxable benefits.