Sole Proprietorship Have you ever considered starting your own business? Many people do it each day. But what is involved in going out on your own? You can start a business in a number of ways. For example, you may set up a partnership or form a corporation. But the least complicated, and most common, way is to become a Sole Proprietor. There are few formal requirements and the costs associated with organizing a sole proprietorship are low. It has the least government intervention with few registration requirements and low regulation. One exception is that if you want to run the business under a name other than your own, you must register under the Partnership and Business Names Registration Act. You must also comply if certain licenses are required, such as a liquor license. If a sense of freedom appeals to you, this type of business may be for you. You are the boss and since there are no co-owners there is no partnership conflict. While a sole proprietorship doesn’t attract many of the legal issues concerning a partnership or a corporation, this type of business does require a person who is able to handle responsibility. No one else is ultimately responsible for the success or failure of the business; this can create a lot of pressure for the owner. When you set up shop as a sole proprietor no new entity is created so the law does not distinguish between you and your business. This means that any income you make will be taxed at a personal rate which is greater than the corporate rate for incorporated companies. But there are also possible tax benefits. For example any losses in the business can be written off against other income. If you are a teacher who runs a flower shop then any lost income in the first few years of running your shop can be claimed as a loss against your income from teaching. Since the business and the sole proprietor are one in the same you are personally liable for any actions of the business. You will be held personally liable for any contracts the business has entered into, for any intentional or negligent acts committed by the business or by employees. You are also personally liable for HST, employee payroll and any other tax remittances. The freedom of making the big decisions yourself is balanced with the pressure of making the business work smoothly. How does this type of business pass from person to person? A sole proprietorship is freely transferable by sale or will. However, if the business is not passed through either of these means the business will end on the death of the proprietor. This short article is intended to introduce you to some of the benefits and challenges of starting your own business. It can give you the freedom and flexibility you seek, but it also requires you to take on personal responsibility. If you have questions about this or any other legal issues, please consult your lawyer.