Short Sole Proprietor Definition:
A business owned and operated by one person, with no legal distinction between owner and business.
Expanded Sole Priority Explanation:
If you’re a sole proprietor, you and your business are legally the same entity. This means you get all the profits, but you’re also personally responsible for all debts and liabilities.
It’s the simplest business structure to set up, which is why many first-time entrepreneurs start here. However, it also means your personal assets could be at risk if something goes wrong.
WorkBay works with many sole proprietors who are taking the leap from home-based work to a professional space for the first time.
Why It Matters
Many first-time entrepreneurs start as sole proprietors because it’s the simplest and most affordable way to run a business. You don’t need to file special paperwork to get started — in most cases, you just start operating and report your income on your personal tax return.
However, simplicity comes with a trade-off: as a sole proprietor, you’re personally responsible for all debts and liabilities of the business. That means your personal savings, home, or other assets could be at risk if your business runs into trouble.
How It Works
A sole proprietorship is considered the “default” business structure in the U.S. If you’re working for yourself — selling products, offering a service, or taking on freelance projects — and you haven’t formed a legal entity like an LLC or corporation, you’re a sole proprietor by default.
Key characteristics include:
- Single owner — you run the business alone (though you can hire employees).
- No separate legal entity — the business and the owner are the same in the eyes of the law.
- Tax simplicity — profits and losses are reported on your personal tax return via Schedule C.
- Unlimited personal liability — you’re personally on the hook for debts, legal claims, and other obligations.
WorkBay’s Approach
At WorkBay, we work with many sole proprietors making the jump from home-based work to a professional space. Our flexible leases, move-in-ready units, and straightforward leasing process are designed to make that transition as simple as possible — no complicated corporate requirements.
Whether you’re a contractor, maker, or small-scale manufacturer, you can rent as a sole proprietor and still get the trade-friendly features your work demands. We’ll walk you through every step so you can focus on building your business, not navigating red tape.
Real-World Example
A furniture maker starts selling their work online and at local markets. At first, they operate out of their garage as a sole proprietor. As orders grow, they need more space and better tools — but they’re not ready to form an LLC yet. With WorkBay, they can rent a pre-zoned, trade-friendly unit as a sole proprietor, fulfilling orders faster and presenting a more professional image to customers.
Frequently Asked Questions
Do I need to register as a sole proprietor?
In most cases, no special registration is required unless you’re using a business name different from your own (called a “DBA” or “Doing Business As”). You’ll still need the proper licenses or permits for your type of work.
Q2: Can a sole proprietor hire employees?
Yes, sole proprietors can hire staff. You’ll need to obtain an Employer Identification Number (EIN) from the IRS for payroll and tax purposes.
Q3: What’s the difference between a sole proprietor and an LLC?
The main difference is liability protection. An LLC separates your personal assets from the business, while a sole proprietorship does not. Taxes are handled similarly for single-member LLCs.
Q4: Is being a sole proprietor risky?
It can be, since your personal assets are at risk if the business incurs debt or faces a lawsuit. Many business owners eventually form an LLC or corporation for added protection.
Q5: Can I rent a commercial space as a sole proprietor?
Yes — WorkBay welcomes sole proprietors. Our leases are designed for small business owners at every stage, including those just starting out.