Sole Proprietorship

In a sole proprietorship, the owner and the business are legally the same entity. This means the owner is personally responsible for all debts and liabilities. It is the simplest and most common form of business structure, requiring minimal registration and compliance. Income from the business is reported on the owner’s personal tax return. While easy to set up, it offers limited liability protection, which can be a risk as the business grows. Many startups eventually transition to more formal structures.