Sole Proprietorship

Learn more about whether a sole proprietorship is right for your business.

Starting a business? Get a Free, Personalized, Step-by-Step Guide!

Learn what forms and licenses you need to start your business and avoid fines. We’ll ask you a few onboarding questions; be prepared to tell us your legal structure, industry, and location.

Try the Navigator

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.