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Easy to establish and easy to run, sole proprietorships are also the riskiest type of business: You enjoy simplicity and control, but you’re completely liable for the business and its employees, with limited tax options. Know what you’re getting into.
Your quote depends upon both your business type and the states in which you do business.
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If you’re doing business without incorporating, then by default, you’re a sole proprietorship: Your business is not its own legal entity. There’s no setup process, but there’s also no personal asset protection—your home, savings, etc. are susceptible to creditors. There’s less paperwork, but there’s still filing to do. You don’t share control, but you also can’t bring on a partner.
One advantage is no initial paperwork and no ongoing state formalities, such as annual reports. However, since CT can mitigate the paperwork involved for LLC, C and S Corporations, this isn’t a significant advantage. From a tax perspective, you avoid double taxation—all business income, profits, losses, and expenses are reported on your personal tax return. However, the same is true of LLCs and S Corporations—without the risks of personal liability you constantly risk as a sole proprietor.
Yes, most businesses need licensing and permits to operate—your business structure doesn’t change that. Additionally, you’ll want a business bank account to withstand scrutiny from IRS. To open one, many banks require a separate business name, which means you’ll need to file for “Doing Business As” (DBA) certificate.