A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure. The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does not have separate legal status from the business. If you are a sole proprietor, you also assume all the risks of the business. The risks extend even to your personal property and assets.
Sole Proprietorship in Ontario
The previous name of this product was Ontario Master Business Licence (MBL). It is also known as business name registration in Ontario. A sole proprietorship in Ontraio must be owned by a single person and not a corporation. When this type of business entity is owned by a corporation, in Ontraio, it’s called Trade Name Registration
Sole Proprietorship in Other Province
In most provinces, this is also known as business name registration. In Alberta, a sole proprietorship and a trade name registration is done in the same form and hence, sometimes a sole proprietorship is called trade name registration in Alberta. To register a sole proprietorship, you must have a address in the designated province.
What are the advantages of a sole proprietorship:
1. they’re easy and inexpensive to set up
2. you’ll have direct control of decision-making
3. minimal working capital usually required
4. there are some tax advantages, such as expenses and losses offsetting your income
5. all profits go to you, the business owner
What are the disadvantages of a sole proprietorship:
1. no corporation to assume liability risk so any claims may have to be paid from your personal assets
2. as the business owner, you’re responsible for all debts
3. inability to sell equity in the business makes it difficult to raise capital
4. harder to sell or transfer your business to others when it’s solely dependent on your involvement