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Sole Proprietorship

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Sole Proprietorship

Definition:

A sole proprietorship is a business owned and operated by one individual.

Legally, if you set up your business as a sole proprietorship, your business is considered to be an extension of yourself. Therefore, as a sole proprietor, you are personally responsible for all the liabilities and obligations your business incurs.

This means that if the business fails, any of your assets, including your personal assets, can be seized to discharge the liabilities owing.

On the positive side, a sole proprietorship is the easiest form of business to set up. If you operate your business under your own name, with no additions, you don't even need to register your business name to start operating as a sole proprietor.

It should also be noted that you don't have to keep the same form of business for the life of a business. Many small businesses start out as sole proprietorships, for example, and then become corporations later on (see Forms of Business Ownership) .

 

 

Common Misspellings: Sole propritorship.

Examples: The sole proprietorship is the most common form of business in Canada.

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