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Sole proprietorship is the simplest form of business enterprise. It is formed by an individual, and has no legal form apart from the individual. While a proprietorship does not have to be an owner operated business, it usually is. Examples of sole proprietorships are many family farms and small shops.
The supposed advantage of this business form is its simplicity. Disadvantages include the lack of a corporate shield, exposure to liability, and the difficulty of managing a business, as it grows and becomes more complex, as a proprietorship. All income, after deductions for business expense, is personal income. Unlike a Partnership, LLC, or Corporation, the Proprietorship is not a separate entity from the business owner. Proprietorships are required to file IRS Schedule SE, self-employment tax on personal income amounting to 15.3%, whereas in other forms of business the entity can acquire and accumulate assets to itself and not be treated as personal income in the same year it is earned.