The IRS recognizes a sole proprietor as a person who owns an unregistered or unincorporated business, called a sole proprietorship. The business owner is also the only employee and has the liberty to make decisions on the business's behalf. This person is also responsible for paying personal taxes and taking care of other business liabilities.
The IRS has several forms that help you file your taxes for your sole proprietorship. In addition, because a sole proprietorship has a single owner, it can operate under the owner's name, unlike other larger business entities like
LLC,
S-Corp or
C-Corp.
A sole proprietorship is also much easier to assemble and dissolve. The owner of a sole proprietorship doesn't need much paperwork or government involvement or the need to seek the approval of multiple partners in a
partnership.
A few examples of a sole proprietorship include:
- Make-up artists
- Individual graphic designers
- Freelance social media managers
- Self-employed camera operators