Sole proprietorships are single-person businesses. Only one person owns the business and is personally responsible for it’s debts. These businesses will generally operate under a fictitious business name, like Harry’s Coffee House. Sole proprietorships are one of the most common businesses. In fact, a lot of businesses are sole proprietorships without even knowing it! However, if the business is not a corporation or a limited liability company and has more than one member, the business is considered a partnership.
Here are some of the advantages and disadvantages of forming a sole proprietorship in Sacramento, California:
Sole Proprietorships Advantages
- Easy Setup. Sole proprietorships are very simple and inexpensive to setup.
- You will still need to comply with local registration and business licenses. A restaurant, for example, may need an alcoholic beverage license, a health permit, commercial refuse collection permit, storm water fees, etc.
- Control. The single owner controls the entire business and runs the operations.
Sole Proprietorships Disadvantages
- Personal Liability. The owner of a sole proprietorship is personally liable for all debts and actions of the business.
- Your house, your car, and your bank account, could all be taken from you if something bad happens.
- Legal Separation. Zero legal separation between the business and the person.
- Business Life. Upon death, the business no longer exists.
These are only some of the advantages and disadvantages with a sole proprietorship. Give our Sacramento business attorneys a call to schedule an initial consultation and let us help! Contact our Sacramento business law firm if you have any questions.