This business entity is operated by an individual for the sole benefit of their own enrichment. It’s the most basic type of business and only accounts for single owners. There are no partners or employees involved. Under a sole proprietorship, your business’s liabilities are mixed in with your personal liabilities.

Some common sole proprietors include retailers, service providers, freelancers, and professional individuals. Although this legal entity is recognized as independent from the owner, it is separate for accounting reasons. In other words, the sole proprietor’s financial activities are held separate from those of the individual’s personal financial events.