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In simple terms, a sole proprietorship refers to a business which is not incorporated and which has only one owner.

(NOTE: A one-person LLC is considered to be a sole proprietorship unless the owner elects to be taxed as a corporation. Remember, the “C” in “LLC” stands for company, not corporation. So, forming an LLC does not mean you’ve “incorporated.”)

Owners of sole proprietorships are called “sole proprietors.”

Sole proprietors report their business activity on a Schedule C attached to their personal Form 1040.

Further Reading