Disadvantages of a Sole Proprietorship


disadvantages to a sole proprietorship

A Sole Proprietorship is a business owned by an individual who operates a business under his/her own name, or as a DBA (Doing Business As).

A sole proprietorship has a lot more disadvantages than advantages. By incorporating as an LLC or corporation, you are legally separating your personal life from your business life. However, a sole proprietorship does not offer that kind of liability protection.

Below you will find the advantages vs disadvantages of owning a Sole Proprietorship;


  • No state filing required
  • Minimal legal requirements (Business License & Insurance)
  • Full control and responsibility of management and operations
  • Typically ceases existence after the death of the sole proprietor



  • Unlimited personal liability (typically you are liable for all debts of the company)
  • Contributions often limited to the individual’s funds
  • Profits taxed at personal tax rates. No corporate write-offs
  • Not a separate taxable entity; if the company gets sued, you get sued, too


You can Compare Business Entities for more information. You can also call 800-345-2677, email or live chat with us. Our staff will be happy to help explain the advantages of incorporating and walk you through the entire process. So, don’t wait call today and find out how Harvard can help get you incorporate your business today.


More By Michael Bell
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