question.jpgIn Business Law

What are the advantages of setting up a sole proprietorship?

There are several advantages to setting your business up as a sole proprietorship. Principally among these advantages is that sole proprietorships are very cheap and easy to setup, and fairly cheap and easy to run. This is because there are not a lot of laws and formalities that you have to worry about complying with. Thus, you do not generally have to hold any formal meetings, make any filings with the state (unless you are using a fictitious name) or pay the state any ongoing fees. Running a sole proprietorship can also make your life easier because you can mix your business and personal assets without worrying about running afoul of any legal requirements (although this is not necessarily a good practice from a practical standpoint), and your business taxes are relatively easy to prepare and file as your profits and losses are simply reported on your personal tax returns. Finally, if you start your business as a sole proprietorship and later find that your needs have grown and you need to run the business in a more complex form (such as an LLC), it is relatively easy to change the business form.