What is Sole Proprietorship? Definition, requirements, and how it applies to your business formation. Learn everything about sole proprietorship for LLCs and corporations.
# Sole Proprietorship
A sole proprietorship is the simplest business structure where one individual owns and operates the business with no legal separation between the owner and the entity. The owner reports all business income on their personal tax return (Schedule C) and bears unlimited personal liability for all business obligations.
While requiring no formation filing, sole proprietorships expose owners to unlimited personal liability — meaning personal assets like homes and savings can be seized to satisfy business debts or lawsuit judgments.
Many Lovie customers convert from sole proprietorships to LLCs to gain liability protection while maintaining the same pass-through tax treatment they're accustomed to.