A sole proprietorship comprises an unincorporated business owned and run by one individual without legal separation between personal and company assets.
Key Features:
- Sole owner retains all profits and faces unlimited liability for all debts.
- Low start-up complexity and costs without formalities of incorporation.
- Offers maximum flexibility but sole funding source.
Example:
An independent graphic designer launched as a one-person sole proprietorship, later taking on freelance subcontractors.
Takeaways:
This simplest structure encourages entrepreneurship through unfettered control. However, proprietors assume greater risk than companies. While tax benefits exist, succession issues upon owner exit pose challenges without transition planning.