The business owned by one person is known as sole proprietorship. The proprietor can control the business on his own or may employ others. This is the most common type of business. Here, there is no division between the business entity and the individual.

The owner has full legal responsibility of the debts acquired by the business. He has to file only one individual tax return. A sole proprietorship is advantageous because it is low cost and low effort business. It requires no registration.

Becoming a sole proprietorship is the easiest choice, when starting a business from home. In this business you are completely responsible for every section of the business, counting the administrative verdicts and the debts that you may owe. You have the sheer control of the entire business.

There is no need to seek out legal services or file a lot of paperwork as you need in corporative business. Sole proprietor also gets benefits in taxes than the ones from the corporation. This business is easy and is something easy to change later on. This is the simplest entity you can setup. For the tax and liability purposes, both the owner and the company are considered to be the same body. It requires very little paperwork and has minimal filing requirements.

Becoming a sole proprietor has downsides as well. When starting a home based business you put your own livelihood at the risk and borrow money from your personal credits. Therefore, you are responsible to pay this money back. So, it may be harder to start larger business initially.

Many people are overwhelmed by the thought of having complete control over a business. So if your personality allows for it, a sole proprietorship will be a good choice. But this is applicable only if you are starting a home business.