A sole proprietorship is a simple, common and unincorporated business structure. The owner gets all profits and takes on all of the business debts and liabilities.
Sole proprietors do not need to take any formal actions to form their business. However, they do need business licenses and permits, with exact rules depending on the locality. The business is not taxed separately from the sole proprietor, and sole proprietors should use Schedule C and Form 1040. While the simple taxation is one advantage of a sole proprietorship, disadvantages include personal liability with no limit, possible difficulty raising capital from investors and banks and the responsibility of running the business alone.