Today, LLCs (limited liability companies) seem to be the favored form of business organization and they do offer a lot of advantages. But for many small startup businesses there is a lot to be said for having no business organization at all, which is referred to as a sole proprietorship.

First what is a sole proprietorship? Basically, it means that there is no legal distinction between you and your business. The income that the business earns is part of your personal income. A sole proprietorship would not have a separate balance sheet since it is not a legal entity: the sole proprietorship does not have assets or debts.…