Running a sole proprietorship may seem like a relatively simple endeavor on the surface, but the legal responsibilities that are associated with this task can be complex. Many sole proprietors assume that they do not need legal guidance because they are not operating a corporation, limited liability company (LLC) or partnership. However, legal support can be a potentially consequential asset for anyone running a one-person business. Whether you are starting out or have been operating for years, a business formation attorney can help you avoid pitfalls and plan for long-term success.
Sole proprietorships are the most basic form of business ownership. There is no legal distinction between the owner and the business, meaning the owner is personally responsible for all debts, liabilities and legal claims. This structure keeps startup costs low and paperwork minimal, but it also exposes the owner to significant risk. A lawsuit, contract dispute or unexpected financial obligation can jeopardize personal assets like savings, real estate or vehicles.
Seeking support can be beneficial
Seeking legal guidance proactively can help sole proprietors understand how to manage the risks that “come with the territory” of running a business solo in this way. For example, an attorney can help draft contracts that protect business interests, clarify terms with clients and reduce the likelihood of disputes. Many business owners rely on generic templates found online, but these documents often fail to account for specific state laws or industry regulations. Customized contracts tailored to specific operations provide stronger protection and can minimize confusion if disagreements arise.
If you either want to run or already run a sole proprietorship, an attorney can also help you understand your tax obligations. Sole proprietors must pay self-employment taxes and may be responsible for collecting and remitting sales tax, depending on the nature of their business.
Another benefit of legal support is assistance with intellectual property protection. Many sole proprietors develop original branding, products or content. Without proper legal protections like trademarks or copyrights, these assets can be used—or even claimed—by others. An attorney can help register your intellectual property and help to ensure that others do not infringe on your creative work.
While sole proprietorships are easy to set up, managing them without legal support can lead to costly mistakes. Investing in legal guidance early on can help you to make the most out of the enterprise that you’ve worked so hard – or plan to work so hard – to build.