8 Sole Proprietorship Examples 2025 Guide Forbes Advisor INDIA

In this article, we’ll focus on a few examples of sole proprietorships for self-employed individuals, independent contractors, and freelancers. Considering the advantages and disadvantages of sole proprietorships, it’s crucial to consider broader economic trends. Understanding these trends can provide valuable context as you assess the suitability of a sole proprietorship for your business endeavors. If you’re running a housekeeping service by yourself, establishing a sole proprietorship can be the way to go.

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Tutors and educators offering their services directly to students in subjects like math, science, language arts, or test preparation can run as sole proprietorships. Like sole proprietors, S corporation owners are also eligible for the 20% pass-through tax deduction established under the Tax Cuts and Jobs Act for pass-through business entity owners. This makes this a perfect fit for a sole proprietorship and is similar to the freelance examples above. There’s little to no liability for being a tutor, especially if you offer services in a public space. When you hire employees or start to bring in a significant amount of revenue, then you’ll likely want to register an LLC. They usually work alone and can easily hire independent contractors if they need work done outside their expertise.

Can I pay myself a salary as a sole proprietor?

Freelance writers are a prime example of the sole proprietorship model, as they offer their writing services to clients without the need for a complex business structure. Being a sole proprietor and a freelance writer offers several advantages, including flexibility in choosing projects, setting their own rates and business expenses, and maintaining complete control over their work. A sole proprietorship is one of the simplest, most streamlined forms of small business ownership.

• A sole proprietorship is a favorable business structure because it’s flexible and easy to set up.
• Many side-hustlers, independent contractors, freelancers, and entrepreneurs run Sole Proprietorships because they’re the easiest and simplest business to work with.
• However, because your work will affect your clients’ health, you’ll need to have liability insurance.
• Keep in mind, however, that many sole proprietors grow their business as time goes on.
• Choosing the right business type and legal structure is an important first step for any entrepreneur.
• There is no limitation on the number of workers a single entrepreneur can hire.

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Understanding these aspects helps you evaluate whether a sole proprietorship aligns with your entrepreneurial goals. Our LLC formation services oversee the entire process, ensuring your business is compliant with local, state, and federal requirements. Not only do LLCs offer liability protection, but they allow you to bring on partners and make it easier to obtain loans, allowing you to raise more capital for your business. Establishing an LLC can also make your business more credible in the eyes of banks, investors, and potential customers and clients.

Sole proprietors have unlimited liability for business debts, lawsuits, and other business-related obligations, while members of an LLC are released from such liability as individuals. Most small businesses start as sole proprietorships and change to different legal structures as they grow. This makes sole proprietorship ideal for those wishing to transition from employee to self-employed over a period of time.

• Due to their experience and expertise, consultants often charge higher fees than other professionals, granting them more freedom in setting their rates and contract terms with business entities.
• Sole proprietorships offer a straightforward path to business ownership, granting complete control to the owner.
• Being a sole proprietor allows this type of small business owner to apply for a “doing business as” (DBA) name and claim business expenses.
• These businesses can be efficiently managed by a single individual who oversees all operations, including food preparation and presentation, customer service, billing, and the management of the business bank account.

Tax considerations

We’ll ensure your DBA name complies with state or county regulations and register it with the correct state or county government agency. It’s important to consider some of the disadvantages of this business structure, too. Like the other businesses on our list, there aren’t any extra setup requirements for you to run a business like this. Not only that, but you will also be able to receive the personal liability protections that come naturally with Limited Liability Companies. Financial planners help manage the profits and expenses of individuals, families, and companies.

Their services range from capturing special moments to organizing events and offering clients personalized services. The owner does everything in the business, including communicating with clients, scheduling, and performing services. These businesses depend on creativity, example of sole proprietorship attention to detail, and working closely with clients. Photographers and event planners who provide individualized services can establish a loyal clientele and benefit from repeat business and referrals. A sole proprietorship is a type of business that is owned and managed by an individual.

An LLC also gives you more flexibility in how your business is taxed since you can elect to be taxed as a corporation. It conducts its own business, and holds its assets, while the owners have limited liability for the company’s debts and actions. A sole proprietorship serves as a straightforward business structure, allowing you to operate independently.

For companies, graphic designers provide advertising material including flyers, pamphlets, and insignias. When not working for a sales or advertising firm, the majority of graphic designers work from home as independent contractors. This explains why a sole proprietorship is ideal for the company’s licensing and tax benefits needs. The business of a graphic artist is a perfect example of sole proprietorship.

For instance, you might need help transitioning from a sole proprietorship to an LLC or corporation to raise capital or protect your personal assets. The right business structure can significantly impact your venture’s success. Consider the benefits and drawbacks of sole proprietorships, partnerships, corporations, LLCs, and other business structures to determine the best fit for your business. Setting up a sole proprietorship is straightforward and requires minimal paperwork. If you’re conducting business as the sole owner, you’re essentially operating a sole proprietorship.

Accounting, bookkeeping and tax preparation services are popular, profitable home-based businesses and therefore, are often set up as sole proprietorships. Many of these professionals, who need to be certified in their respective industries, set up their sole proprietorships as a way to earn extra cash outside of their regular 9-to-5 jobs. Different than other forms of business incorporation, the sole proprietor is personally liable for any legal actions, judgments, or debts against the business. Debt collectors can come directly after your personal assets in order to cover debts owed by your business. This is one of the most commonly cited risks of existing as a sole proprietor. Despite the fact that a sole proprietorship is not technically a business entity, owners can hire employees.

A business may receive assistance from financial planners who work with businesses in setting up its employee retirement plans and other employee perks. The business owner in a sole proprietorship is the sole owner of the firm and is subject to all earnings. They are also personally liable for all debts, obligations, and losses incurred by the company. Sole proprietorships assume unlimited liability, while LLCs have some liability protection.

An independent artist who sells their work to clients is an example of a sole proprietor. Many freelancers, artists, actors, writers and makers tend to function as sole proprietors. Ultimately, a sole proprietorship is best for you when you have an idea and want to start immediately. By prioritizing effective financial management, you ensure long-term success for your sole proprietorship. Businesses of all sizes will need a lawyer at some point, whether that is to register their business or to deal with a client that isn’t paying.