12 sole proprietorship examples: when to choose this business structure 

When it comes to starting a small business, one of the most important decisions you will make as an entrepreneur is choosing which form of business structure you will operate. This decision is typically determined as you draft your business plan and will influence how you prepare your income tax each year before submitting it to the IRS. 

Further, there are several types of business structures, including a limited liability company (LLC), corporations (C-Corp and S-Corp), and general liability. However, a popular choice amongst many small businesses and self-employed individuals is to form a sole proprietorship. But what is a sole proprietorship? What are the benefits of choosing this form of business structure over others? And what are some sole proprietorship examples I can reference? These are the types of common questions you may have if you are thinking of starting your own business. 

Therefore, we are going to dive deeper into sole proprietorship as well as some helpful sole proprietorship examples to help make your entrepreneurship journey a little more efficient. That way, you can make an informed decision about whether this type of structure is right for you. Therefore, to learn more about sole proprietorship, keep reading. 

What is a sole proprietorship?

A sole proprietorship or sole trade name is an unincorporated business entity that has a sole owner. As such, you have the ability to work as a freelancer, independent contractor, or small business owner, allowing you complete control of your personal finances. Therefore, rather than operating as a separate legal entity with a different business name, most sole proprietors choose to do business as (DBA) themselves. As a result, all business income you make as a sole proprietor would be filed under personal income tax, also known as self-employment taxes. To do so, during your tax preparation, you will have to fill out a schedule c form 1040 before submitting it to the IRS. In addition, small business owners may be eligible for tax deductions on their tax returns. 

Further, having sole business ownership also offers you the flexibility to choose whether you want to keep a separate business bank account. However, keep in mind that one of the disadvantages of a sole proprietorship is that any business debts your business has, are also your personal debt. This means that you have unlimited liability or full legal responsibility should your business go bankrupt. As a result, your personal assets can become your personal liability and become seized as collateral. 

12 examples of sole proprietorships  

Moreover, now that you understand what a sole proprietorship is let's take a look at 12 sole proprietorship examples to determine whether this type of business model is right for you. 

1. Freelance Writer 

The majority of freelance writers operate as independent contractors. This means that they offer their services to several businesses at a time, rather than working with a single company. As such, they often produce work under their own name or "doing business as" (DBA), which automatically entitles them to work as a sole proprietor. That way, should they want their name attached to their work online, it is easily searchable and serves as a record of their employment for their portfolio. 

2. Landscaper

Generally speaking, if you're considering starting a landscaping business, chances are you'll begin as the sole operator of your business. Not only would this allow you to see if landscaping is something you want to do full time, but it also allows you to grow your client list. Until you become extremely busy with clients, operating as a single-member will enable you to identify as a sole proprietor for your income tax return. Further, it also allows you to change your type of business entity later on, should you wish to grow your business. 

3. Bookkeeper

Bookkeeping is another common sole proprietorship if you're looking for the flexibility of freelancing. Rather than serve as a bookkeeper for a single company, you can choose to offer your services part-time to numerous businesses. On the other hand, if you are already bookkeeping full-time for a company, you can also choose to do so for extra income on the side without going through the hassle of registering with the government. 

4. Graphic Designer

While graphic design offers you the ability to work with a company, many choose to work from the comfort of their own home as a freelancer. Not only does this provide you with flexibility in your schedule, but it also means that you can operate as a sole proprietor, which can offer you tax advantages on your personal tax return. 

5. Photographer

Moreover, freelance photography is another type of business that allows you to make money as a sole proprietor. As a photographer, you have the option of submitting business expenses to save on your tax return simply by applying to do business under your name. 

6. House Cleaning 

Similar to landscaping, many housekeeper businesses begin as single-member businesses. Therefore, if you're thinking of cleaning houses, a sole proprietorship is most likely your best option, as it is likely that you will continue to do business on your own rather than hiring other people to assist you. In the future, if you do end up growing your business, you still have the option of applying a different business model. 

7. Baker 

Moreover, if you're choosing to be a baker, while there is the option of hiring employees, it is possible to begin your business as a single legal entity. This allows you to work by yourself as you grow your clientele while still having the option of hiring employees and becoming a larger business in the future. 

8. Academic Tutor 

Again, academic tutoring offers the flexibility of working as a freelancer or with a company. If you do decide to freelance, a sole proprietorship is recommended as you will most likely be working alone, similar to the jobs we listed above. Additionally, if you do not plan on hiring more tutors to work under your guidance in the future, this type of business model is ideal as it is straightforward and doesn't require a business license. 

9. Virtual Assistant 

Virtual assistants help businesses respond to emails, schedule appointments, and other typical administrative tasks. While you can work with a single company, being a freelance virtual assistant offers you the flexibility to choose how many clients you want, the ability to work from home, and the convenience of working by yourself as a sole proprietor. 

10. Social Media Manager

With social media on the rise, freelance social media management is a growing industry that works well with a sole proprietorship business model. You will likely be doing all the work yourself, which is why it can benefit you to work as a single entity without other employees. 

11. Accountant 

Freelance accountants are common during income tax season. As you will be doing the work yourself without help from others, a sole proprietorship is easy to establish and maintain as separate tax records are not required. 

12. Personal Trainer 

Last on our list of sole proprietorship examples is personal training. As personal trainers work one-on-one with clients, this type of business model works well as it is unlikely you will hire other personal trainers to assist you with your clients. However, in the future, if you do decide to open your own gym, you have the option of changing your business model at a later date. 

When to choose a sole proprietorship 

Moreover, now that we’ve gone over what a sole proprietorship is and some examples, let’s take a closer look at when you should choose this type of business model: 

• If you are planning on keeping a single-person operated business without hiring any other employees to help you. 
• If you are starting your business with your own personal finances without taking out a business loan. 
• You have a business plan that is sustainable with little to no chance of going out of business.
• If you are confident with your personal assets being used as collateral should your business go bankrupt in the future. 
• You want to have complete control over your business and how it operates. 
• You wish to experience a relatively easy and inexpensive method to startup your business. 
• You’re looking to experience easy income tax filing and fewer fees for registration. 
• Business owners have the ability to begin small and change their business model down the road if they choose to hire employees as their business grows. As such, you have no legal obligations that can stop you from doing so if you change your mind in the future.