Many sole proprietors may not even realize that, legally, they are designated as such. Because of the simplicity of a sole proprietorship, individuals can operate their businesses with little administration or legal formality. A sole proprietorship is a business that is owned by one person who reaps all the benefits and is responsible for all the losses and obligations of the business. An overview of the benefits and risks of a sole proprietorship follows.
One method for small businesses to obtain money is through "equity financing" or "debt financing." Equity financing means that you sell stock in your company to a buyer, who then has an ownership interest in your company. Debt financing is a business loan — you owe the person or entity that holds the debt (usually in the form of a promissory note) the amount borrowed and interest. Here are the most common sources of equity and debt financing for small businesses.
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