A Sole Proprietorship is essentially a business that is both owned as well as operated by one single person. This makes it, arguably, one of, if not THE simplest form of business ownership/operation. The owner is the embodiment of the business in that the business itself is not a separate or recognized legal entity. Some of the sole proprietors that might be the first to come to mind are tradespeople, web designers and independent entrepreneurs.
Because the sole proprietor is the independent owner, he/she is responsible for all of the business operations as well as assets and liabilities. Financially, it is the owner who is held personally liable for any and all debt or liability of the business.
Some advice for those looking to embark on a sole proprietorship journey:
- Accountants, next to dogs, are a man’s best friend:
Take the time to seek out an accountant who is reputable, and offers quality service. Don’t skimp out because often times, especially when it comes to your taxes, accountants are something that you get what you pay for.
- Spreadsheets? More like Deadsheets!
Try finding a software that has features and tools to combine and simplify your expenses, invoices and even estimates. These software will be more advanced and user friendly when it comes tax season than your manual, imperfect spreadsheets.
- Receipts are forever; Keep them, use them, expense them.
Receipts are key in ensuring you expense everything against your business which lowers how hard you will get hit by the hard, cold fist of the tax man.
- Insurance keeps those pearly whites white!
Health Insurance is not one of the perks of sole proprietorship but, depending where you live, can be great to have to ensure that you’re covered, if and when you need it.
This is some basic advice, be sure to do your research to ensure sole proprietorship is the best type of business for you!