What are the disadvantages of setting up a sole proprietorship?
While setting your business up as a sole proprietorship offers you certain advantages, it does come with some disadvantages. One large disadvantage is that, because the business is not a separate legal entity from you, the owner, you are personally liable for the business and any debts, losses, court judgments, etc. In addition, because the business is not separate from the owner, it does not generally live on when the owner dies, and the business taxes are part of the owner’s taxes which means that the owner cannot take advantage of certain business-related tax laws. Finally, if you want to raise additional capital for your company, you cannot sell an interest in the business, as you can with corporations and LLCs.