However, the simplicity of a sole proprietorship can also be a business owners worst enemy. Why?
doesnt give any protection against the inherent risks and potential liability exposure of running a business. Creditors are free to go after not only the assets of the business but also all of your personal assets, such as bank and savings accounts, land holdings, investments, heirlooms and household furnishings. So if you operate as a sole proprietor, youll want to try to protect your assets through insurance, homesteading a residence, retirement accounts and perhaps eventually bankruptcy. Many sole proprietors operate their businesses with a false sense of security that insurance provides them with adequate protection against the perils of personal liability exposure. To the contrary, there are many risks that are typically not covered by insurance, such as damages for breach of contract and claims arising out of an employment relationship (like sexual harassment or wrongful termination).
Related Questions
- If my company is a sole proprietorship and I registered with Revenue using my Social Security Number, will that number be sufficient to register as a Business Entity?
- I operate my business as a sole proprietorship. Can I deduct the claims I make for my family and myself through the MediDirect® program?
- However, the simplicity of a sole proprietorship can also be a business owners worst enemy. Why?
