Sole Proprietorships

· Simplest form of business

· Owner is the business

· Constitute over two-thirds of all American businesses

· One percent of the sole proprietorships existing in the United States have revenues that exceed $1 million per year.

• Proprietor receives all profits
• Easier and less costly to start
• Pays only personal income taxes on profits, which are reported as personal income on the proprietor’s personal income tax form.
• Allowed to establish tax-exempt retirement accounts in the form of Keogh plans

• Proprietor bears the burden of any losses or liabilities incurred by the business enterprise. (unlimited liability)
• Opportunity to raise capital is limited to personal funds and the funds of those who are willing to make loans
• Lacks continuity upon the death of the proprietor