10 Examples of Sole Proprietors
A sole proprietorship is one of the simplest, most streamlined forms of small business ownership. Since sole proprietorships include only one employee—you—they are easy to establish and manage, and provide an uncomplicated business structure for independent contractors and entrepreneurs across numerous industries.
Accounting, bookkeeping and tax preparation services are popular, profitable home-based businesses and therefore, are often set up as sole proprietorships. Many of these professionals, who need to be certified in their respective industries, set up their sole proprietorships as a way to earn extra cash outside of their regular 9-to-5 jobs.
Freelance writers contribute a variety of written content to magazines, websites and other businesses. By nature, freelance writers typically work as independent contractors, so their businesses are a perfect fit for sole proprietorship.
If you love to bake or prepare food for others as a service--meaning, you're getting paid to do it--you’re a great candidate for a sole proprietorship. Be aware, however, that if you’re making food and baked goods in your own home, you may be subject to a state health inspection or you may require other zoning permits.
Direct sales is a multi-billion-dollar industry, with millions of men and women selling everything from diet shakes to beauty products. Although affiliated with a much larger business, most direct sellers own their own businesses and are independent contractors; therefore, they are required to handle their own taxes and bookkeeping.
If you run a small landscaping or yard-mowing business by yourself, a sole proprietorship would be a good fit. However, as with any sole proprietorship, if your business grows and you start to bring more help on board, you’ll need to restructure your business into a partnership, corporation or limited liability company (LLC).
Another popular example of sole proprietorship is tutoring. Tutors provide after-school help for students of all ages, and typically work by themselves. In addition, tutors are often paid in cash, so you’ll want to make sure you establish an effective bookkeeping practice—and don’t forget that the IRS can audit you (or any small business) at any time.
If you’re running a housekeeping service by yourself, establishing a sole proprietorship can be the way to go. As with landscaping businesses, however, if your business begins to thrive and you start to hire more help, you’ll need to restructure your business to avoid any future tax penalties.
Starting an in-home childcare business can be profitable, but doing so involves numerous state regulations regarding the cleanliness and safety of your home, as well as stipulations regarding liability insurance. While setting up a sole proprietorship is an efficient way to structure your business, you’ll want to make sure you meet all of your state’s requirements before welcoming children into your home, so that you’re not met with legal penalties down the road.
As with freelance writers, companies often outsource graphic design or other artwork to independent graphic designers or artists. As long as you’re working for yourself and not partnering with other artists, a sole proprietorship will be the perfect structure for your business.
If you’re certified to teach yoga, fitness classes or you are a personal trainer, you can set up a sole proprietorship to help others meet their fitness goals. However, because your work will affect your clients’ health, you’ll need to have liability insurance. Be sure to check your state’s specific requirements before launching your business, especially if you'll be working out of your home.