Simple to start, but enormous in potential. Read these examples of sole proprietorships (and how some owners became multi-millionaires) to help your business succeed.
No matter the industry, sole proprietorships are an excellent business structure option. Naturally, this depends on your business’s goals and needs.
What is a sole proprietorship?
Essentially, a sole proprietorship is a sole trader managed under either the owner’s legal name or a registered DBA (trade/fictitious name). In a sole proprietorship, you are the exclusive owner of the business.
- Want us to explain a sole proprietorship a bit more? Click here.
Business jargon and processes can get confusing at times. But in fact, you probably have a number of sole proprietorships pop up on your social media feed every day. TRUiC lays out some examples to help you understand how sole proprietorships operate in the real world.
- Personal trainer
A standard example. If you are in the health and fitness industry, and you wish to help others improve their overall wellbeing, by offering your services as a personal you are considered to be operating a sole proprietorship. Remember only one person is needed to run a sole proprietorship and turn a profit.
- Accountants, bookkeepers, tax preparers.
Running a small business on the side to supplement your income is quite popular in this financial industry. This type of business structure would be considered a sole proprietorship.
- Ebay and WalMart are famous examples of businesses that began as sole proprietorships until they expanded large enough to become formal corporations.
This is a popular example of a sole proprietorship. Tutors often work alone, therefore additional staff is not required to turn a profit. The offered service of extra lessons to students looking to improve their studies, and the tutor as the sole provider, the tutor becomes the exclusive owner and operator.
- Should the business expand and more partners join, that is usually the point when businesses start investing forming an LLC or corporation.
- Bed and breakfasts
If you love meeting travellers, cooking and baking, and designing brochures for your city perhaps becoming a B&B owner should be your next adventure. By providing these goods and services to guests (clients), the law will view your business as a sole proprietorship.
- Although sole proprietorships are commonly one person operations, you are allowed to hire employees to help your business grow. However, the owner will need to have an Employer Identification Number (EIN) before this is permitted.
- Art galleries
Do you know an artist or connoisseur of the arts? Have they converted their garage to a private gallery? By displaying artworks for sale, they have easily established a sole proprietorship.
Perhaps your partner is an excellent amatuer baker and chef. In their spare time they decide to offer catering for tea parties selling baked goods. They would then be the sole trader and owner of their catering business (a sole proprietorship).
- Side thought: If you began your catering career by selling lemonade to your neighbourhood and community when you were a child, this would have been your introduction to operating a sole proprietorship already.
- Music lessons
With your extra time on the weekend you decide to offer guitar lessons. You are now operating as a sole proprietorship and you are on your way to teaching your first client their A, B, C, D, E, F, G’s of music.
- Remember that as a sole proprietorship you will be responsible for all damages. Therefore, if your guitar string snaps, you will need to pay to replace it otherwise this will prevent you from earning future income.
- Graphic designers/artists
This is an excellent example of a business that can be owned and operated by only one person. Need a logo for your business? Outsourcing uniquely designed social media content? That graphic designer/artist providing those goods to you would be operating a sole proprietorship.