Sole Proprietor or Business Entity? Small Business FAQ

Two common questions of a new business owner are:

  1. Do I need to incorporate or form a business entity?
  2. Does a sole proprietorship work better if my business consists of only me?

A business entity protects your personal assets from creditors and other legal claims against your business. Without the protection of a business entity, it is possible your personal assets could be used to satisfy a legal judgment related to your business activities. With a business entity in place, the entity serves to shield your personal assets from such claims.

A sole proprietor, defined generally as any business conducted by a single individual and operating without a business entity structure, does not receive the same type of liability protection for their personal assets.

For this reason alone, it is generally advisable to form a business entity to operate any business venture.

Leave a comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: