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Is a sole proprietorship right for your business?

On Behalf of | Apr 15, 2022 | Business Entities

As an entrepreneur, you have a lot of options when it comes to structuring your business. Settling on a business formation may not seem all that important, but it can actually have tremendous ramifications for your business operations and how any legal issues are resolved, should they arise. That’s why it’s in your best interest to understand your options and choose the one that is right for you.

What is required for a sole proprietorship?

A lot of Texans simply want to open a sole proprietorship. Here, you don’t have to file extensive documentation with the state, and you don’t have to deal with electing officers or board members. You simply have to register your name with the state and secure appropriate licensures to ensure that your business is abiding by state and local laws and regulations. It’s pretty simple to set up.

The advantages of a sole proprietorship

There are many advantages to this business structure. To start, you retain full control over the business, and you don’t have to share management decisions with anyone. Additionally, you can comingle business assets with your personal assets, which can make your life a little easier. Another advantage is that business losses can help offset your personal tax liabilities.

The disadvantages of a sole proprietorship

There are disadvantages to this structure, though. Chief amongst them is the fact that you remain personally liable for the business’s debts and any judgments rendered against it. This can be a significant risk, and one that you shouldn’t take lightly.

Navigating business formation to your advantage

 There’s a lot to take into account when starting a business. That’s why it might be best for you to discuss your circumstances with an attorney who can help guide you through the process to ensure that you protect your interests and know exactly what you’re advantages and risks are moving forward.