Jeff is a writer, founder, and small business expert that focuses on educating founders on the ins and outs of running their business. From answering your legal questions to providing the right software for your unique situation, he brings his knowle.
Jeff White ContributorJeff is a writer, founder, and small business expert that focuses on educating founders on the ins and outs of running their business. From answering your legal questions to providing the right software for your unique situation, he brings his knowle.
Written By Jeff White ContributorJeff is a writer, founder, and small business expert that focuses on educating founders on the ins and outs of running their business. From answering your legal questions to providing the right software for your unique situation, he brings his knowle.
Jeff White ContributorJeff is a writer, founder, and small business expert that focuses on educating founders on the ins and outs of running their business. From answering your legal questions to providing the right software for your unique situation, he brings his knowle.
Contributor Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Updated: May 8, 2024, 11:49am
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A sole proprietorship is a business entity where all liabilities and financial obligations pass to the single owner of the business. Those choosing a sole proprietorship are usually in low-liability career fields and seek the administrative ease and flexibility that comes with this type of entity. We’ve compiled a list of eight different types of businesses that make good sole proprietorship examples.
A freelance writer provides written content for clients, either for print or digital publication. They may write about a number of topics and in numerous forms, such as blogs, articles, white papers, scripts, ads, e-books, emails and more. A freelance writer is an independent contractor and works with their clients as an external team member on specific assignments.
What makes a freelance writing business a good fit for sole proprietorship is that it is a low-liability risk and is flexible. Many writers are part-time freelancers, so being sole proprietors of their own individual businesses makes sense.
Photographers typically work for themselves taking pictures at weddings, graduations, events or for other specific purposes such as senior photos or marketing materials. Some work at studios while many work on location for whatever event they are capturing. Many photographers are part-time. Most are solopreneurs, meaning they work on their business all by themselves.
A photographer likely has business expenses for their travel and equipment, which they can deduct for their business on their own tax return. A sole proprietorship often makes the most sense for a photography business in many cases because it is a low-risk business without a lot of liability. There is little benefit to most photographers, especially as they are starting out, to register another business entity type.
Personal trainers typically work out of their homes or in the homes of their clients. Gyms aren’t likely to accept the liability of letting you train people in their building unless you are an employee, so that their insurance will cover any mistakes.
The liability that a personal trainer has can likely be covered, for the most part, by liability insurance. There isn’t a lot of risk to accepting money to train people in a home or through online training unless they are injured. Until your business becomes quite lucrative, there are few benefits to registering anything but a sole proprietorship.
Plumbers who work for themselves and don’t hire employees are good candidates for a sole proprietorship. Their liability is typically limited and covered by insurance. It can be difficult to get your own individual plumbing business off the ground so saving any costs you can is important.
Once you start expanding your business or hiring employees, then it might make sense to register a limited liability company (LLC).
The field of graphic design is another area that works well as a sole proprietorship. A graphic designer takes on photo or image work from a number of different clients, billing each separately.
They usually work alone and can easily hire independent contractors if they need work done outside their expertise. There is no real liability to the work, making it another great career field for sole proprietorships.
Starting a business as a housekeeper means finding homes to clean and establishing a regular list of clients. This can be difficult to do on your own, but you also aren’t likely to need to pay for help right away.
The business is very easy to start and since you’re operating in the homes of clients, their home insurance will most likely cover any potential liability (though you should have your own insurance). Starting out as a sole proprietorship makes sense until you need to hire regular help to keep up with increased business.
A housekeeping business is likely to outgrow a sole proprietorship. When you hire employees or start to bring in a significant amount of revenue, then you’ll likely want to register an LLC.
Owning a bakery with a single location makes your business a good fit for a sole proprietorship because it is stable with low liability potential. You’ll have insurance to cover mistakes, such as food illnesses or slip and falls in your bakery. If you operate your bakery under any name but your own legal name, you will need to file a DBA (doing business as) with the state or local government.
Many bakeries need to hire employees unless they are specialty bakers in small towns with short hours or a special order-only policy. A small-town baker is often a good fit as a sole proprietor while a more growth-minded bakery will need to eventually form a business entity such as an LLC.
An educational tutor usually picks up clients as they can. They often go to the clients’ homes or meet them at libraries. This makes this a perfect fit for a sole proprietorship and is similar to the freelance examples above. There’s little to no liability for being a tutor, especially if you offer services in a public space.
Choosing to run your business as a sole proprietorship can be a good choice for businesses with a very low liability risk that don’t want to deal with the administration that other business entity types require. Business owners who aren’t fully committed to their business and are just dipping their toes into the water of entrepreneurship will find this to be a good immediate option.
There is no registration necessary to form a sole proprietorship in most places, but you should file for a DBA (doing business as) name with your state, city or county if you use a name for the business that is anything other than your own legal name.
Some areas require all businesses to register their information with the city or county even if they are sole proprietorships, so be sure to understand your local laws. Additionally, you may be required to obtain a license to conduct certain types of business in your area.
Deciding what type of business entity to use when starting a business is an important decision. You might be happy with a sole proprietorship or consider a partnership, LLC or corporation. Each comes with its own unique set of pros and cons. A sole proprietorship is the default business entity that your business falls into if you do nothing and are the only owner of your business. It carries the lowest setup fees and requires very minimal paperwork.
A sole proprietorship is typically the best option for very small businesses where no employees are needed. If you are in a low-liability profession and do not need investors, a sole proprietorship may be the right choice for you.
As your business grows and you need employees or investors or want more tax advantages, you can consider other entity types. In particular, if you become concerned about protecting your personal assets from the liabilities of your business, forming an LLC can be a great idea.
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Sole proprietorships and limited liability companies (LLCs) are used for different purposes. An LLC is typically best for businesses with more liability potential and those that need to hire employees. An LLC also gives you more flexibility in how your business is taxed since you can elect to be taxed as a corporation. Learn how to set up an LLC.
Businesses of all sizes will need a lawyer at some point, whether that is to register their business or to deal with a client that isn’t paying. The best online legal services are affordable and able to quickly solve your legal issues. You can read our guide to the best online legal services to learn more.
You can, but it requires you to dissolve the LLC first, which is known as a dissolution. The steps involved include getting approval from all members of your LLC and filing your dissolution documents with the state agency that you filed your articles of incorporation with, which was likely the secretary of state. Then, you have to alert all of your creditors that you are dissolving the LLC so that you can receive your final bills from them and pay them. You must also file all tax forms with the federal government as well as on the state and local levels if necessary. The final steps include transferring any assets that you have to the sole proprietorship, publishing your dissolution, such as in your local newspaper or a posting on your social media sites, and transferring all business licenses from your LLC to your sole proprietorship.
A sole proprietor is someone who owns a business independently and hasn’t registered it as another type of business entity. Many sole proprietorships never register with the state, but it is recommended to file a DBA if you are using a name other than your own legal name. Sole proprietorships do not have multiple owners, and they are not registered as LLCs or corporations.
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ContributorJeff is a writer, founder, and small business expert that focuses on educating founders on the ins and outs of running their business. From answering your legal questions to providing the right software for your unique situation, he brings his knowledge and diverse background to help answer the questions you have about small business operations.
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