What is a sole proprietorship?

A sole proprietor is a form of business entity that is unincorporated and owned by one individual. The main advantage of the sole proprietorship is that it is not taxed the way a normal corporation typically would be (it is not subject to double taxation). The owner of the sole proprietorship will normally only pay self employment tax based on what they have earned. The downside is that the individual will have unlimited liability when it comes to the debts and obligations of the business. Creditors can come after your personal possessions.