Creating a new business involves many decisions before the business starts selling goods or services, such as choosing types of products it will offer and its legal structure. The legal structure of a business determines how it pays federal taxes, the legal liability of the owners and how owners manage the company. A sole proprietorship is a type of business with a single owner who makes all business decisions.

Brick and Mortar Business

A brick and mortar business is a company with a physical location that consumers can visit to purchase goods or services. Many neighborhood retail shops, restaurants and service companies are sole proprietorships. Organizing a brick and mortar business as a sole proprietorship can be risky, since renting and stocking a store is expensive, and the owners of sole proprietorships are responsible for paying a business's debt if the business fails.


An e-business is a company that uses the Internet as a channel to sell goods and services or generate revenue from advertisements. An e-business does not need a physical location that consumers can visit, which can be advantageous to sole proprietors since that limits start-up costs and risk. An e-business sells goods and services through a company website or through third-party websites like eBay or Companies can also earn revenue by creating interesting or informative content to attract Web users and then placing advertisements around or within content.

Independent Contractor

An independent contractor or freelancer is a worker who sells services to clients rather than working as an employee under the direct control and supervision of an employer. The Internal Revenue Service considers independent contractors to be self-employed business owners. Many independent contractors organize their companies as sole proprietorships, since they are relatively simple and inexpensive to create and operate.


The simplicity of sole proprietorships makes them the most popular type of business in the country. The New York Times reports that approximately 80 percent of all companies in the U.S. were sole proprietorships in 2010. While many brick and mortar stores, e-businesses and contractors are organized as sole proprietorships, they don't have to be sole proprietorships. For example, a restaurant could be organized as a partnership among family members and an independent contractor could operate as a single member limited liability company.