There are many ways to structure and run a business. Entrepreneurs who enjoy playing an active role in their businesses often prefer a business structure that will allow them to maintain a strong level of control. For these men and women, a sole proprietorship structure is often a good choice.
What is a sole proprietorship?
A sole proprietorship is typically the most cost efficient and easiest business structure. Small operations with just one or a handful of individuals are often best suited to this structure. Entrepreneurs are not stuck with a sole proprietorship forever either, as it can transition into a different business structure when needed. A few key features of a sole proprietorship include:
- No formal paperwork is necessary to set up
- Individuals are not shielded from liability for business debts
- Are considered simple income
While setting up a sole proprietorship is pretty straightforward, it is important to remember that it is still a business. Taxes are always a factor when running a business. Since any profit derived from a sole proprietorship is considered simple income, that profit is counted as personal income from the owner and is taxed as such.
Just like any business structure, there are benefits and drawbacks to running a sole proprietorship. Many entrepreneurs in Georgia appreciate the simplicity of setting up this structure. The lack of protection from liability for business debts may give some people pause, though. When weighing the possibility of various business structures, it is often helpful to do so under the guidance of a knowledgeable attorney who has experience in this field.