What’s a Sole Proprietor? Is That a Bad Thing?

A sole proprietor is a person with a business who has never formed a company with the state. If you’ve been doing business but you’ve never established a corporation, an LLC, or another kind of company, congratulations! You’re a sole proprietor. If you have a name for your business, you are “doing business as” that trade name. If more than one person are doing business without formalizing a company, that’s called a general partnership.

In both cases, you could be legally operating a business (provided you have the right business license and other permits and insurance) without having the protection of a company.

A sole proprietorship or a general partnership isn’t a bad thing. However, you are generally not protected from your business’s risks and liabilities. Every situation is different, but we often recommend forming an LLC or a corporation to protect your personal assets. Formation and maintaining your business is very affordable, especially when compared with the amount of legal protection you get.