Pros and Cons of a Sole Proprietorship

Congratulations! You have a new business idea. Now it is time to make it official. This week we examine the various types of business structures.
Let’s start with the most basic, Sole Proprietorship.

Pros:
· Quick and easy to set up.
· You skip a lot of the complex tax forms and avoid most restrictions from the other types of businesses.
· This business is basically just an extension of you. So you have complete control over every decision and action.
· You won’t need to complete any complex financial statements like income statements or balance sheets.
· Perfect for your first start-up, part-time small business!
· All you need is the IRS Form 1040 (Schedule C) to pay self-employment taxes on Schedule SE.

Cons:
· You are 100% liable for any and all debt and obligations. You could potentially lose all of your personal assets in a lawsuit.
· The business cannot live without the owner (you), and the business would terminate if you become unable to operate.
· Operating a business requires a lot of cash, and it is typically very difficult to raise capital in a sole proprietorship.
· Handling 100% of the decisions and actions will become stressful and overwhelming as your business grows.