Sole Proprietorship
In a sole proprietorship, the business is synonymous with the owner. This is often a service-based business, with the owner providing the service in person (for example, a self-employed plumber), but you’ll also see sole proprietors of small brick-and-mortar retail stores .
A sole proprietorship is what’s referred to as a pass-through entity, meaning the owners take the profits and losses on their personal tax returns, but the business itself does not pay taxes. However, sole proprietors are subject to self-employment taxes.
Sole proprietorships offer maximum control and are easy to set up, with low startup costs, but they come with some disadvantages too: the owner has full legal and financial liability, meaning if the worst happens and the business gets sued, the litigant can go after the owner’s personal assets. It’s also harder to raise capital from investors or to get business loans because this is the type of business that is built to remain small. It’s not built to last, either — since the business and the owner are the same entity, the life of the business is dependent on the working years of the proprietor.