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 Illinois, 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, you are the sole owner and are personally responsible for the business's debts and obligations. This means there is no legal distinction between your personal assets and the business's liabilities. To operate legally, you must obtain the necessary licenses and permits, which vary depending on the type of business, location, and industry-specific regulations. For instance, if you provide certain professional services, you may need a professional license. Additionally, you may need to register a 'Doing Business As' (DBA) name with the county clerk if you operate under a name different from your legal name. It's also important to keep in mind that while the formation of a sole proprietorship is straightforward, you are responsible for all tax obligations, including paying income tax and self-employment tax on the profits of the business.