A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities. You don't have to file special forms or pay fees to start your business.
Main advantages:
- Simple and inexpensive to create and operate
- Owner reports profit or loss on his or her personal tax return
Main drawbacks:
- Owner personally liable for business debts
- Owner cannot give/share equity (limits funding opportunities and potential partners)
If you are unsure of which structure is best for your business, you can visit a New Jersey Small Business Development Center. Some business owners also seek professional advice from an attorney or accountant.
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