A sole proprietorship is the simplest and most common form of business ownership, where a single individual owns and operates the business.
There is no legal separation between the owner and the business, meaning the owner is personally responsible for all debts, liabilities, and obligations. The owner receives all profits and reports income and expenses on their personal tax return. Sole proprietorships are easy to establish and require minimal regulatory paperwork, making them ideal for small businesses, freelancers, and independent contractors.
However, they also carry higher personal risk since the owner’s personal assets may be used to settle business debts or legal claims.