This is the simplest form of organization and allows a single owner to have sole control and responsibility. Most small businesses operate as sole proprietorships. As a business grows, owners may decide to expand and form another structure, such as a partnership or LLC.
Sole proprietorships present a few advantages over other business structures. They require fewer forms to establish and have fewer legal restrictions, and the owner retains profits. It’s also a simple process to discontinue the business if necessary. However, sole proprietorships have unlimited personal liability for all debts and liabilities of the business, limited ability to raise capital, and the business is terminated upon the sole proprietor’s death.