What are they?
A sole proprietorship is simplest business form and that is because you are your business. There is no legal distinction between you and your business when you are a sole proprietor. Any profits, losses, debts and liabilities incurred in your business are yours and yours alone. Establishing a sole proprietorship costs next-to-nothing as there are just the minimal fees associated with registering your business and obtaining necessary licenses/permits. The ease and cost-effectiveness of establishing a sole proprietorship are the biggest advantages of this structure. The biggest disadvantage is that owners’ personal assets are fair game if things go south with the business’ finances. Sole proprietors are also inherently limited in how much they can grow because of how exposed they are to liability.
Who are they good for?
Sole proprietorships are generally good for one-person, service-based businesses that do not carry large amounts of risk and no do not require large amounts of outside capital (investments). Independent designers, copywriters, accountants and consultants are a few professionals that come to mind as good candidates for sole proprietorships.