Course: What is credit?
8 minute read
Sole proprietorships
A sole proprietorship is often considered easy to set up and is the business structure many people start with.
Because a sole proprietorship is unincorporated and has just one owner, you avoid the hurdles of government regulation. However, sole proprietorships do have their disadvantages when it comes to credit and loans.
In this type of business, personal credit history becomes a large factor in deciding creditworthiness. So, as your business grows, it can become harder to manage financial liabilities that can damage personal credit. For that reason, it may be wise to consider incorporation at some point.