Entrepreneur or Solopreneur
Sole Proprietorship is the simplest business form a small business owner can start.
A Sole Proprietor is not a legal entity, instead it represents the person that owns the business and the one that is responsible for any incurred debts attached to the business.
HOW TO GET STARTED
INITIAL STEPS OF STARTING A SOLE PROPRIETORSHIP
START WORKING ON YOUR BUSINESS PLAN
Writing a business plan will help you get your ideas and goals organized. Your business plan acts as a road map that will help you stay on track with productive and financial goals.
WORK ON YOUR CREDIT
When running a business, even if your have savings, there will be expenses that will require more funding that what you may have on hand. When needing to finance an expense, one of the key factors reviewed by the lending will be your credit.
The better your credit standard, the more options you'll have with your choice of lender as well as a better interest rate.
DECIDE YOUR BUSINESS NAME
As a sole proprietor, you have the option of doing business under your legal name.
A pro of using your legal name is there'll be no need to register a fictitious business name.
The fee for registration is usually pretty low, but this will be ones less expense. A con of using your legal name is the lack of perceived credibility. A business name looks more professional and gives the appearance of looking like a bigger company.
GET THE LEGAL STUFF TAKEN CARE OF
Take care of any licenses, permits or registrations your need to be legit. In a sole proprietorship, documentation is usually inexpensive and it's the simplest of all business types.
OPEN A BANK ACCOUNT
The easiest way to keep your expenses and profits in order is to open a business account. This also helps when wanting to get a clear picture of your profit and your losses.
A business account will also help with organization that comes in handy when tax time rolls around.
TAXES & BOOKKEEPING
AS a sole proprietor, you can file your business expenses with your personal taxes, to get the biggest return possible, it's best to have an account of every expense, even down to pencils.
On surface level it may seem like an unnecessary expense, but business insurance is the best way to keep yourself protected in the case of unexpected liability. As a sole proprietor, any damages and expenses tied to that damage is your responsibility. You've not backed and free of liability like a corporation, for example.
GET HELP IF NEEDED
Many states offer guides on needed documentation as well as processes on how to complete it. But if you ever feel you need assistance, don't be hesitant about seeking further assistance.
Your local SBA (Small Business Administration) has helpful tools or if you have the budget you can seek legal assistance.
PROS & CONS
OF SOLE PROPRIETORSHIP
No need to create a business name, your can use your legal name to conduct business
LOWER COST TO START
You can invest as you go as opposed to needing a large amount of capital upfront
Unlike other business formats, you don't have a board of directors or partners to listen to. You can make all business decisions on your own.
KEEP MORE MONEY
There are no business partners to share profits with, so you keep all the profits
Taxes are simpler and rates are lower.
There are much fewer rules and regulations for sole proprietors to follow. This is the easiest platform for filing taxes and getting your business registered.
You are solely liable for fees and debts including pending lawsuits and court fees.
Funds are limited for sole proprietors. Outside of having angel investors, getting grants or using your own savings, raising capital is more difficult.
Banks are more likely to fund a partnership or a corporation based on the fact that there are more parties to pursue for repayment
You are the generator of your own ideas, with no other sources of inspiration to pull from. Some decisions may be difficult and a partner or board of directors could assist with tough choices.
LESS PROFESSIONAL LOOKING
Unlike partnerships or corporations, the only brand backing you is you. It may be harder for people to trust you your business based on only you.
BUSINESS MAY FAIL IF YOU'RE UNABLE TO RUN OPERATIONS
Unfortunately, unlike a partnership, corporation or LLC, etc, where you can pass off responsibilities, you are running the business on your own.
If you have to take time off for family issues or any other reason, your business may suffer lack of structure and directions.