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 Vermont, a sole proprietorship is indeed the simplest business form and is automatically established when an individual begins business activities on their own. There is no legal distinction between the owner and the business, meaning the owner receives all profits but also bears unlimited personal liability for any debts and obligations incurred by the business. While no formal action or filing with the state is required to create a sole proprietorship, the owner must comply with all relevant licensing and permit requirements, which vary depending on the type of business, location, and industry-specific regulations. It is important for sole proprietors in Vermont to check with local and state authorities to ensure they have all necessary approvals to legally operate their business.