It's easy to form a sole proprietorship, since you don't need to file articles of incorporation or create an LLC. However, this means that the business owner and the business will be treated as one and the same. Thus, the owner can be held liable for the debts of the business; if you're the owner, this means someone suing the business could come after your personal assets, not just the assets of the business.
From a tax perspective, operating a sole proprietorship allows the business owner to deduct the losses of the business on their personal tax return. Moreover, you won't be subject to double taxation like you would if you had created a C corporation. However, the profits of the business will be subject to self-employment tax.
A sole proprietor must file Schedule C to report the profit or loss of the business along with their individual tax return (1040). If the person owns multiple businesses, they must file a Schedule C for each business. —
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