Sole proprietorship

A Sole Proprietorship is the simplest form of business ownership, with one person running the business without forming a separate legal entity. It requires no formal paperwork but offers no liability protection. This means the owner is personally responsible for all business debts and obligations. Many small businesses start as sole proprietorships and later transition to an LLC for protection and credibility. Comparing sole proprietorships to LLCs is a common step in deciding when to formalize a business.