A sole proprietorship is an individual person who conducts business solely on their own. In most states this is a one person business. If the individual wants to use a business name they are required to obtain a “fictitious name certificate” or a “doing business as” document that allows them to transact business under that name. If you open up the phone book and consult a couple small business accountants and / or small business attorneys you are likely to get several different opinions on using this form of business entity. This entity can be very cost effective starting out but also can create a lot of personal liability for the sole proprietor. The sole proprietorship type of entity is difficult for factoring companies to finance because it is hard to properly perfect a security interest in the assets to a sole proprietor. It also creates a lot of risk when searching for other secured parties because problems arise because people have the same or similar names. The factoring company can be required to search many different names in many different jurisdictions which can be very expensive. To learn more about the standard features of sole proprietorship entity review this chart.
