A sole proprietorship is a business entity with a single owner. As a sole proprietor, you own a business as an independent contractor or small business owner. You have complete control of your finances. Many home-based businesses are sole proprietorships. Popular examples include freelance writers, home healthcare services, financial planners, tutors, and bookkeeping services. As businesses grow, many sole proprietorships transform into limited liability companies or corporations.
Benefits and Risks
Sole proprietorships offer flexibility and ease of setup. However, the owner has unlimited personal liability, which means there is more financial risk than in other business structures.
Examples and Growth
- Freelance writers
- Home healthcare providers
- Financial planners
- Tutors
- Bookkeepers
As these businesses expand, many choose to restructure into limited liability companies or corporations to protect their owner’s personal assets and possibly take advantage of other benefits.