Pros and Cons of Running a Business as a Sole ProprietorshipPosted May 15, 2016
Sole proprietorships are the most common of business form in the U.S. The popularity is due in large part to the ease with which someone can create a sole proprietorship. There are no formal legal requirements to create a sole proprietorship, beyond the licenses and permits unique to running your business and any trade name registration.
However, like any form of business that you choose, there are pros and cons to running your business venture as a sole proprietorship.
Pros of a Sole Proprietorship
The main attractions of doing business as a sole proprietorship are the relatively low start up costs and ongoing costs of tax preparation.
Sole proprietorships also offer maximum control over your business.
Cons of a Sole Proprietorship
Though sole proprietorships offer low costs and a high level of control, they come with a high degree of risk. Unlike a limited liability company, sole proprietorships expose their owner to unlimited personal liability.
For example, if your business fails and you owe someone money, that person can recover from your personal bank account and other assets. Options for transfers of ownership are likewise limited.
Raising money and estate and succession planning can also be difficult for a sole proprietor.
Business Attorneys Help Your Business Get Off the Ground
Starting a new business involves many initial business, legal and tax decisions. The type of business you choose to form can have lingering consequences when you are looking to sell the business, raise money or plan for future generations. If you or someone you know is starting a business, then the New Jersey business attorneys at Foss, San Filippo & Milne can help it get off the ground the right way. Call our law office at (732) 741-2525 or contact us online.