Cons of running a sole proprietorship


If your business owes someone money, so do you. And if someone sues your business, they’re suing you personally. Other structures like corporations—act as a shield for this kind of liability. The sole prop doesn’t provide any kind of shield.

Uncertain lifespan

If a sole prop owner decides to go out of business, the company dissolves. That makes it hard to maintain continuity long-term. For instance, if you own a convenience store and you want to pass the business on to one of your kids, you’ll have to jump through some hoops. Other structures make this easier—by letting you bring them on as a co-owner or business partner before you leave.

Difficulty raising loans

In general, banks are less likely to loan money to a sole proprietorship than to a different business structure. They’re seen as less “professional” and stable. Also, since you can’t sell shares of your sole prop—as you can with a corporation—it may be difficult to bring on investors.

Limited viewpoint

Even if you’re a seasoned business maven, there’s something to be said for bringing more than one point of view to the table. When you have a corporate board overseeing your company—or partners or co-owners to consult with—you can rally more experience and expertise to make business decisions.

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