Choosing to have your business as a sole proprietorship is the easiest route, but leaves you personally at risk for any losses. Since there are no filings, there are no fees to create a sole proprietorship. As a sole proprietorship, you, the owner, are personally liable for all gains and debts of the business. Any taxes owed to the federal and local governments are paid by you, the owner. Sole proprietorship means that you are personally liable for all aspects of the business: credit score, taxes, liability, gains and debts. There is essentially no difference between business entity and individual owner when it comes to sole proprietorship.

This option is only available to those businesses in which there is one owner, hence the term, sole proprietor. In many states, the business owner will be required to file the business’s trade name or a “Doing Business As” request. These filings, on average, cost just a few dollars and can be easily submitted and completed by the individual owner.

Sole proprietorship comes with ease of creation but can many times not fit the right bill when it comes to personal liability and tax liability. Sole proprietorship may be just the right entity type for you. If not, you need to look at your other options to figure out what best suits your business structure.