Did you know that there are over 20 million sole proprietorships in the United States? That means that over 80% of all businesses in the United States are individually owned and operated businesses.
Legally and for tax purposes, a sole proprietorship and a individual are the same thing. He or she is responsible for reporting their business profits and losses on their 1040 form. You are also responsible for all of your taxes.
The interesting thing is that unlike a corporation or a limited liability company, when you die (the owner of the sole proprietorship) terminates by operation of the law. That means the business cease to legally exist unlike a corporation or a LLC which need to be terminated through filings with the Secretary of State.