6 Sole Proprietorship Advantages and Disadvantages

Starting your own business is a big step—and choosing the right business structure can feel overwhelming. If you're just getting started, you’ve probably heard of the term sole proprietorship. It’s one of the most common (and simplest!) ways to launch a business in Canada.

Let’s walk through the pros and cons so you can decide if it’s the right fit for your journey.

What is a Sole Proprietorship?

A sole proprietorship is a business owned and operated by one person. You’re the boss, the decision-maker, and the heart of the business. There’s no legal separation between you and the business, which keeps things simple—but also brings unique responsibilities.

Advantages of Sole Proprietorship

1. Easy to Set Up
No complex paperwork or legal hoops. Registering as a sole proprietor is quick, affordable, and straightforward.

2. Full Control
You’re in charge of every decision. Want to pivot your services or rebrand? Go for it. You call the shots.

3. Keep the Profits
All the profits go straight to you—no shareholders or partners to split earnings with.

4. Simple Tax Filing
You’ll report business income on your personal tax return, which keeps tax season a little easier.

5. Lower Startup Costs
With fewer fees and no incorporation costs, it's one of the most budget-friendly ways to get started.

Disadvantages of Sole Proprietorship

1. Personal Liability
Because there’s no legal separation, you’re personally responsible for any business debts or legal issues.

2. Limited Funding Options
Banks and investors often prefer incorporated businesses, which can make financing a bit harder.

3. You’re On Your Own
As a sole proprietor, all responsibilities rest on your shoulders—from customer service to bookkeeping.

4. Fewer Tax Perks
You won’t have access to some of the tax benefits and deferrals available to corporations.

5. Harder to Scale
As your business grows, you might outgrow the sole proprietorship structure and need to consider incorporating.

So, Is It Right for You?

If you're just getting started, want to keep things simple, and are testing out a business idea, a sole proprietorship might be the perfect first step. Many entrepreneurs begin here—and as they grow, they evolve into other structures.

Need help deciding or registering your business? We're here to make that process easy, affordable, and stress-free.