What is a Proprietor?

Definition: The proprietor of a business is its owner. This business structure is also referred to as a sole proprietorship. For all legal and practical purposes, there is no distinction between the proprietor and the business itself.

What does Proprietor mean?

A sole proprietorship is the simplest and most common form of business ownership. When an individual wants to set up a business, it is a natural choice. That’s because:

⇨ It is very easy to set up a sole proprietorship. Most self-employed individuals and those who operate from home, prefer this business structure.

⇨ A sole proprietorship is a low-cost way to get into a business. You can avoid the costs associated with setting up a corporation. You will also save on legal fees.

⇨ Filing taxes for a sole proprietorship is uncomplicated.

⇨ The greatest advantage of a sole proprietorship is that the owner is free to make business decisions independently.

However, this business structure has some negative aspects as well. The primary drawback of a sole proprietorship is that the owner is personally liable for all the debts of the business.

The court may order a sole proprietor’s personal assets to be seized to repay business debts. Personal bank accounts, retirement funds, and even the home of the business owner could be used to pay off the debts that are owed by the business.

In this respect, a limited liability company offers a greater degree of protection. When a company borrows money, the debt must be paid from the company’s resources. The bank or financial institution that has advanced money to the company cannot raise a claim on the company’s stockholders.

Example of Proprietor

Margaret Abel has completed a Basic Interior Design certificate from the New York School of Interior Design. She proposes to start a business that will help clients remodel their homes. She will also provide her services to small offices and restaurants.

Her business will initially be structured as a sole proprietorship. But she intends to convert it into a limited liability company after a year or two. This will entail additional paperwork and expenses. However, she is willing to bear the cost and the inconvenience as an LLC will provide her protection against being personally liable for her business debts.


A sole proprietorship is an unincorporated business owned by a single person. The proprietor is individually responsible for the company’s debts. This form of business structure is highly popular as it is easy and inexpensive to establish.