Owning Your Own Business - Part 1 - Sole Proprietorship

Written by Posted On Tuesday, 17 January 2023 00:00

As a real estate sales licensee, or broker, you OWN your own business.

What business form have you chosen and why?

Often new licensees are attracted to the conversation and allure of the supposed tax advantages of some forms of ownership, before the new licensee is in a position to form an entity, separate from themselves.

What are the advantages and disadvantages of operating your business as a:

• Sole Proprietorship
• Corporation (C Corp and Sub Chapter S)
• Limited Liability Company

I will examine the above in separate posts.

Sole Proprietorship

The oldest, simplest, and most numerous form of business structures, owned by one individual. Sole proprietors are the sole decision makers of their business.


• Least expensive to set up and maintain. Does not require a separate tax return each year from the sole proprietor, but instead, the addition of a Schedule C to the sole proprietor's 1040 (Personal Tax Return).
• Sole proprietorships can be flexible and can change occupations and operations as they wish.


• A sole proprietors business assets and personal assets are one and the same and both are included of the estate of the sole proprietor.
• Any depts incurred, business or personal, are the debts of the estate. When a sole proprietor dies, the estate is liable for all of the outstanding debts of the business. Sole proprietors can lose everything if their business fails.
• Difficulty passing the business to heirs - When a sole proprietor dies, the business usually dies too. The fact that the business is not a separate legal entity can cause insurmountable problems for heirs and employees of sole proprietors who do not plan for their and their businesses future.


Before you consider anything other than a Sole Proprietorship for your real estate business, check with your license authority to make sure that the type of business structure you are considering, is allowable under your state license law. Do not take the advice of other licensees alone, unless they have the expertise to advise on this matter.

For most people who sell real estate, the Sole Proprietor structure is adequate. Do not make the decision to move away from a sole proprietorship until you have examined all of the alternatives in the context of your current business, and your expectations of the future of your business. Owning your own business - Part 1 - Sole Proprietorship

As a real estate sales licensee, or broker, you OWN your own business.

What business form have you chosen and why?

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