- The easiest way to form a business
- Cheaper to run than any other form of business
- No shareholders or partners, sole proprietor receives all the income generated by the business
- Easy to break up
- Sole proprietors make their own decisions, earnings can be put back into the business under own decision.
- Business profits from a Sole Proprietorship run straight to the personal tax return of the owner.
- A Sole Proprietorship is not a limited liability business formation. A Sole proprietor has absolute liability of the business and is legally liable for all debts, therefore their personal assets are in danger.
- Part of the benefits and deductions that other forms of businesses have may not be available for a Sole Proprietorship
- Funding of the business may be a difficult issue when funding of the business is needed, or in general. A Sole proprietor may have to use his personal savings account for funding the business, or may have to use a more expensive credit than other businesses.
- The business may look unprofessional, keeping professionals (whether an employee or a company) away from the business
Form 1040: Individual Income Tax Return
Schedule SE: Self-Employment Tax
Form 8829: Expenses for Business Use of your Home
Schedule C: Profit or Loss from Business (or Schedule C-EZ)
Form 4562: Depreciation and Amortization
Employment Tax Forms
Form 1040-ES: Estimated Tax for Individuals
Return to article: How to Register a New Business
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