Starting a business in the U.S. is no easy feat, especially if you're an immigrant. BUT sole proprietorship is the simplest form of business, in which only one person owns the business and is personally responsible for its debts.
Read our article and learn about Sole Proprietorship's advantages and disadvantages. Don't forget to share your thoughts in the comments!
A Sole Proprietorship is the most straightforward industrial organization form. It is an unincorporated organization owned and run via one individual, without a distinction between the business and the owner. You, the owner, are entitled to all profits and are accountable for all your business's money owed losses and liabilities.
Upon receiving authorization from the United States to engage in “work” in the United States – in the form of an EAD, or Employment Authorization Document, an individual may work for any employer at any time during the validity of the EAD.
Some examples of individuals eligible to file for an EAD, include:
Applicants with a pending adjustment of status application
Spouses of L-1 multinational transferees
Also, under new changes during the past year, it is now possible for spouses of E-1 and E-2 visa holders to receive work authorization immediately upon admission to the United States under such status. These spouses were previously required to file for an EAD, but now receive work authorization upon entry with a valid E-1 or E-2 visa.
Other visa categories exist that permit the filing for an EAD, and you should check with your immigration lawyer to determine eligibility.
Upon receiving an EAD, it is possible for an individual to work for any employer in the United States. In addition – the individual may also start his or her own business in the United States. In such a circumstance, it may be beneficial or more efficient to establish the business as a Sole Proprietorship.
Advantages of a Sole Proprietorship
Easy and Inexpensive to Form—A sole proprietorship is the simplest and least expensive business structure to establish. Costs are minimal, with legal costs limited to obtaining the necessary license or permits.
Complete Control—Because you are the business's sole owner, you have complete control over all decisions. You are not required to consult with anyone else when you need to make decisions or want to make changes.
Easy Tax Preparation—Your business is not taxed separately, so fulfilling the tax reporting requirements for a sole proprietorship is easy. The tax rates are also the lowest of the business structures.
Disadvantages of a Sole Proprietorship
Unlimited Personal Liability—Because there is no legal separation between you and your business, you can be held personally liable for the debts and obligations of the business. This risk extends to any liabilities incurred as a result of employee actions.
Hard to Raise Money—Sole proprietors often face challenges when trying to raise money. Because you cannot sell stock in the business, investors will not often invest. Banks are also hesitant to lend to a sole proprietorship because of a perceived lack of credibility when it comes to repayment if the business fails.
Heavy Burden—The flipside of complete control is the burden and pressure it can impose. You alone are ultimately responsible for the successes and failures of your business.
A Concluding Tip
Choosing a business location is perhaps the most crucial decision a small-business owner or start-up will make, so it requires precise planning and research. It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more.
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