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Advantages of Choosing a Sole Proprietorship Entity

Why do some entrepreneurs choose the sole proprietorship type of entity and others do not? Is a sole proprietorship type of business entity right for me? What are the pros and cons of operating a sole proprietorship kind of business? If you have ever asked yourself any of such questions, then read on as I spill every detail you need to know about doing business as under the sole proprietorship entity.

Statistics reveal that over 75% of all existing businesses are operated under the sole proprietorship type of business entity. What is responsible for such high rate of sole proprietorship business startups? You’re going to find out soon. In this article, I am going to reveal the pros and cons of running a sole proprietorship type of business. After reading this article, you are going to know and decide if a sole proprietorship type of business entity will suit your business. Now what is sole proprietorship?

What is a Sole Proprietorship?

A sole proprietorship business is a business owned and operated by an individual. It’s a business that exist as the individual; not a separate entity. In fact, in this type of business; the owner is the business. Businesses operated under the sole proprietorship are usually named after the owner. For example, Mary’s Tea shop, Tony’s Grocery, Martins’ Fast food, Ajaero Auto Repair and so on.

Now why do entrepreneurs choose the sole proprietorship type of entity? Why do people start businesses in their own name? What are the advantages of running a business under a sole proprietorship type of entity? You are going to find out the answers below. Many small business owners, mom and pop businesses operate under the sole proprietorship type of business entity for the following reasons.

Advantages of Doing business as a Sole Proprietor

1. You will be your own boss

Many a time, I have heard statements from aspiring entrepreneurs such as “I want to be my own boss” or “I want to do things my way.” Small business owners always feel good being in charge; they love being responsible for themselves and not taking orders from anyone. That’s why most small businesses are operated under the sole proprietorship type of entity.

2. The business owner keeps all the profits

This is another reason why many entrepreneurs choose the sole proprietorship form of business. The proprietorship type of business entity allows the business owner or entrepreneur to keep 100% of the profit.

3. Freedom to do their own thing

Most entrepreneurs love the sole proprietorship type of business entity because it allows them to freely express themselves. They can showcase their talent, skill, expertise and still get acknowledgement for it. Entrepreneurs under this category are usually called the “do it yourself-ers” because they love doing things their own way. Under this umbrella, you will find entrepreneurs who are barbers, hair dressers, painters, etc. In fact, they are the self employed of the society.

4. Another advantage of doing business as a sole proprietor is that you don’t have to prepare financial statements for anyone. Since you own 100% of the business, then you are not accountable to anyone. There will be no external auditing of your business account and you are under no obligation to report your business earnings or financial position.

5. When you are a sole proprietor, you have the ability to quickly make and implement decisions. Flexibility is the name of the game in a sole proprietorship kind of business.

6. When you are doing business as a sole proprietor, you have almost none or less paper work and legal restrictions.

7.  If you choose to run your business under the sole proprietorship for of entity, then you can cease to operate or close down the business without any legal formalities.

In conclusion, these are the seven major reasons why most businesses are operated under the sole proprietorship type of entity. I listed these seven advantages so that you can choose if becoming a sole proprietor is a way forward for you. But if I am to give my own opinion about doing business as a sole proprietor, I will say from experience that the sole proprietorship entity is the worst entity to operate your business because it leaves you open to all sorts of attack from financial predators and lawsuits.


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