Sole Proprietor

Sole Proprietor

A sole proprietor is an individual who owns and operates a business independently. This business structure is characterized by the lack of legal distinction between the owner and the business entity, meaning the owner is personally responsible for all debts and liabilities incurred by the business.

As a sole proprietor, an individual has complete control over all business decisions and receives all profits generated by the business. However, this structure also exposes the owner to unlimited personal liability, as personal assets can be used to satisfy business debts. Examples of sole proprietorships include freelance consultants, hairdressers, and small retail shops.

Tax implications for a sole proprietor typically involve reporting business income and expenses on the owner’s personal tax return using Schedule C (Form 1040).