What is a Sole Proprietorship?
Gregory Gilman, CEO of RxVantage (www.rxvantage.com), talks about a Sole Proprietorship. This information will educate you on some of the in's and out's of a sole proprietorship.
- Simplest & defacto type of business for an individual owner
- Allows the hiring of employees
- You personally assume total liability for the company
I have started a bunch of businesses myself and advised dozens more. And I get a question pretty often what is a sole proprietorship. This is quite simply the most basic business type.
It is the de facto business entity if you are in business for yourself and you are the sole owner. You can have employees but if you are the only owner of the business and you have not set up a separate type of legal entity, you are in fact a sole proprietorship.
This means that you have, unfortunately, unlimited liability for the business so any debts, any liabilities of the business are yours personally as well.
You are also, unfortunately, if you have employees responsible for any employee liability that arises from their performance in the course of their business duties.
So again, you very well may want to think about creating a separate type of legal entity in order to limit your liability if you are a sole proprietorship.