A sole proprietorship or individual company is one in which the owner is a single person, said person will be the one who receives all the profits generated by the economic activity of the company; However, just as you will benefit from the profits, you will also be responsible for the losses that arise, even at the expense of your assets.
These types of companies are characterized by not having partners in their charter, so the owner is a single subject, who independently and autonomously, personally and permanently carries out an economic activity for profit. Legally sole proprietorships have the obligation to respond to third parties, with all of their assets, that is, their liability is unlimited.
This form of business is one of the simplest to establish, they are generally small businesses, often family-owned.
According to the laws, once this company is registered in the commercial register, it acquires legal personality. For its constitution it is necessary that a writing be drawn up where it is reflected: name, identity document, address and domicile of the owner, company name, followed by the word sole proprietorship, if not called that, it will be understood that the owner will respond unlimitedly, the address, the time of stay; This, if not indefinite, A detailed and complete explanation of the main activity, the amount established as capital, specifying the assets contributed and their value, The management and administration, which will correspond to the sole employer, who will approve all essential decisions, regarding financial statements, administrative reports, profits, etc.
Sole proprietorships have the advantage of being easy to set up, since all the procedures and formalities necessary for their creation are simple. However, these kinds of economic entities lack organization, so it would be difficult for a single person to get the capital, since they would have to recover all the funds of the company. Another negative point would be that the owner would have unlimited liability for all debts incurred by the company. In the same way, if the company is successful, the normal thing is that risks arise, these risks tend to grow over time, so the owner must make options that minimize these risks one of them is to form an individual company of limited liability.
