Because it is the easiest type of business to start,
since most states do not require sole proprietors to register their business
with their Secretary of State. Another obvious bonus is that you have no one to
answer to but yourself, having the ability to set your own work schedule and
routine. And also don’t have to share profits with anyone. One of the
functional advantages of sole proprietorship is that they are easier to set up
than other business entities. A person becomes a sole proprietor simply by
running a business. Sole proprietorship also have tax advantages over other
business entities. In income tax law, sole proprietorship do not require
separate tax filings. Instead, an owner reports the net income or net loss from
the business on his personal income tax form.
In addition to simplicity, this also
avoids the owner from incurring “double taxation” on business income, as in a
corporation.
A sole proprietorship is dissolved
when the owner stops doing business. This can occur if the owner sells the
business, passes away and leaves the business to his heirs, or simply closes
the business.
