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Small business owners are people that own small businesses. In the United States, a small business is often defined as an independently owned company that has fewer than 100 employees, but exact definitions vary by state. In Australia, a firm with 19 or less employees may be considered a small business, while the European Union has defined small businesses as those with 250 or fewer employees. Small business owners may be professionals with their own business such as accountants or lawyers or they may own a gift shop, bakery, bed and breakfast, restaurant or other company. A small business owner could have either a sole proprietorship, partnership, limited liability company (LLC) or a corporation.
A small business owner who is the only employee in the company is in a sole proprietorship situation. For example, a freelance writer or artist working alone for clients from his or her own home may be considered a sole proprietor. Sole proprietorships don't have to register formally with the government. The individual is personally liable for his or her business debt and reports business earnings or losses on personal tax returns. A partnership is the same as a sole proprietorship in terms of liability and registration, only it is for one or more business owners.
A limited liability company (LLC) offers small business owners some limit on their personal liability, so this reduces part of the risk of owning a business. However, LLCs are not recommended for most owners of a small business because of the efforts and costs involved in operating these types of business structures. Corporations don't have any personal liability attached and are often business structures used by larger companies. Corporations file completely separate tax returns and the owner's liability is completely separate from that of the corporation.
Some advantages for small business owners include a great sense of accomplishment plus a sense of independence at work as they are now the bosses and main decision makers. The disadvantages of being a small business owner include time and risk factors. Since small businesses often don't have an abundance of employees, especially in the beginning, owners must spend long days handling many different parts of the business. Also, new businesses have a risk of failing, especially in the first year, and small business owners must make careful decisions in regards to planning and running their companies.