What is a Florida Sole Proprietorship?
A Florida sole proprietorship is a business structure that involves a single business owner setting up operations for themselves. Sole proprietors are the only owners of their business.
Why Start a Sole Proprietorship?
Sole proprietorships can be appealing for several reasons.
- First, unlike limited liability companies (LLCs), partnerships, and corporations, sole proprietors do not have to register with the state to set up their operations.
- The only exception is if the sole proprietor uses a fictitious name or title for their business. In that circumstance, the business owner would need to pay a small fee to register their name or title as a DBA (doing business as) with the state.
- If you do operate under a DBA, the law requires that you advertise under your DBA name in at least one newspaper that is located within the county where your principal place of business is located.
- Second, sole proprietorships do not require additional fees. By contrast, establishing a corporation, partnership, or LLC can be very costly.
- Third, these businesses are easy to begin. Unlike other Florida business structures, there is virtually no wait for a sole proprietor to open a business under their name.
- Fourth, as the only owner and decisionmaker for their business, sole proprietors do not have to create bylaws, shareholder agreements, or operational plans. They also get to make all decisions about how to run their business.
- Finally, because they are not a separate legal entity, a sole proprietor’s returns can be taxed as their personal rather than business income.
Reasons Not to Open a Sole Proprietorship
Sole proprietorships may not be suitable for some business owners. Some potential drawbacks to this business structure include:
- —One of the primary issues with operating a sole proprietorship is personal liability. Unlike an LLC or Corporation, a business owner operating on their own can be held personally liable for the business’s debts. If, for example, a customer or vendor sues for breach of contract or anything else related to the business, a sole proprietor could be held personally liable.
- — Although sole proprietors have complete autonomy, they are also responsible for financially supporting their business. Other business formations like an LLC, partnership, or corporation involve more stakeholders and may have added financial stability and support.
- —As a small business owner, you probably want to do all you can to grow. However, sole proprietors may be limited in how much capital they can devote to expansion and growth.
- —Running your own business involves wearing many hats. Not every sole proprietor is equipped to manage multiple aspects of their business. Therefore, sharing leadership with others who have skill sets that complement their own may benefit some owners and businesses.
- —Although sole proprietors enjoy simplified taxation, they may also have fewer deductions than other business entity types. In addition, LLCs and corporations have certain tax benefits that are not available to sole proprietors.
Deciding whether or not to open a sole proprietorship is a complex calculation. There can be pros and cons to this business structure. The best way to assess the suitability of sole proprietorship for your business is by consulting with an experienced Florida business law attorney.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent small business clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.