A business that has only one owner is termed “sole proprietorship”. The business owner is called a “sole proprietor”. A sole proprietorship is the most simple type of business entity. The requirements for forming a sole proprietorship are less. This usually involves getting a business license, permit, and complying with other state or local business regulations.
Although the structure is simple, liability of a sole proprietor can also be quite a heavyweight. A sole proprietor is “completely” liable all business debts or legal claims i.e the owner’s personal properties or assets can be taken by court order to repay claims or judgements.
As your business expands, a sole proprietor may want to add more owners. This is the time to choose to form other type of business structure. The decisions should be based on factors such as liability, taxation, and the size of the new business expansion. These new types of business structure include: corporation, LLC (limited liability company), or partnership.
More to come on types of business structure….