A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.

You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities. In fact, you may already own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor. But like all businesses, you need to obtain the necessary licenses and permits. Regulations vary by industry, state, and locality.

In Alabama, a sole proprietorship is indeed the simplest business form and does not require formal registration with the state to be established. As a sole proprietor in Alabama, you are the sole owner and operator of your business, and there is no legal distinction between you and your business. This means you are personally entitled to all profits but also personally liable for all debts, losses, and liabilities incurred by the business. While no formal action is required to create a sole proprietorship, you must comply with all relevant licensing and permit requirements, which may vary depending on the type of business, location, and industry. It is important to check with local city and county governments to ensure that you have all necessary local business licenses. Additionally, if you choose to operate under a trade name or a name other than your own, you must file a DBA (Doing Business As) with the probate judge in the county where your business is located. It's also important to maintain proper records and separate personal finances from business transactions for tax purposes.