What is a "Sole Proprietor"?

A "Sole Proprietor" is defined as a business that is owned and operated by a single individual. This type of business structure does not involve partners or other stakeholders in ownership, meaning that the owner has complete control over all decisions and operations. This direct control allows for simplicity in management and quick decision-making. Additionally, a sole proprietorship is often the easiest business form to establish, generally requiring minimal legal formalities, and the owner reports business income and expenses directly on their personal tax return.

In this structure, the owner is personally liable for all debts and obligations of the business, which is an important consideration when discussing the risks and benefits of being a sole proprietor. This ownership contrasts with businesses organized as partnerships, corporations, or non-profit organizations, where ownership, liability, and tax implications differ significantly. Understanding the concept of a sole proprietor is essential for recognizing various business structures and their implications in the landscape of commerce and law in North Carolina and beyond.