Sole proprietorships are the simplest form of business organization. The advantage of a sole proprietorship is low cost. Another advantage is favorable income tax treatment because income or loss is simply reflected on Schedule C of the sole proprietor’s personal 1040 income tax returns.
A disadvantage of a sole proprietorship is the sole proprietor’s unlimited liability for debts of the business. This would include liability for debts of vendors or suppliers, and damages or losses caused by the business.
A sole proprietor can operate under a business name. This is usually referred to an assumed name. An assumed name can be reserved by filing an assumed name certificate with the Minnesota Secretary of State’s office. The purpose of the filing is to avoid duplication of business names which can be confusing for the public. Another purpose for filing the assumed name certificate is for the Secretary of State’s office to have a record of the name and address of the business owner.