Why going Solo is a No-Go- The Pros and Cons of Having a Sole Proprietorship

A sole proprietorship is an easy business entity to form. Sole Proprietorships are the easiest to form because all you have to do is begin. If you start operating as a business whether it be selling your goods or services you automatically have a business. That truly is the best pro about starting a sole proprietorship it takes no effort or time and often there are no overarching requirements with most states. (Although there may be licensing requirement check your state.)

Now for the cons. Having a sole proprietorship exposes the business owner (you) to unlimited liability for business debts and lawsuits. That means those debtors and others would have access to your house, car, bank account etc., everything! Secondly, there is no formality. Your business does not have a business account oftentimes or necessary presence and credits that could secure your business funding or legitimacy. Third, taxation, your business will not be taxed separately from you as the owner. Lastly, it can only be you. Sole proprietorships by default mean only one person calling all the shots.

Honestly, I would only recommend a Sole Proprietorship for businesses that don’t have customers, clients, and don’t deal with money. If you want to be sole owner of your business that’s perfectly fine, but I would recommend opening a Single Member LLC (SMLLC) all the benefits of a sole proprietorship without any of the liability.

Interested in learning more about LLC’s ? Check out our take on LLC’s here.

We would love to talk to you about your business , to help save you money, time, and legal complications.