Proprietorships outnumber all other forms of business organizations in the US. A proprietorship is simply a business owned by one person. Setting up a business is fairly simple and inexpensive – seldom more complicated than applying for a city or state license. All income is taxed as personal income to the proprietor. Depending on this person’s filing status and income level, this can be an advantage or a disadvantage. For example, depending upon the owner’s level of taxable Income, a proprietorship may owe more or less tax than a corporation with the same level of taxable income. As the firm has one owner, this person’s expertise determines much of the success of the firm. If additional expertise is needed, the owner must hire someone. The life of the proprietorship ends when the owner dies; in general, a proprietorship is not an asset that can be easily valued and sold. Agency costs are nil in proprietorships, as the manager is the owner, and he or she presumably will make decisions that reflect his or her best interests. The ability to raise capital income is limited to the owner’s personal wealth and credit line (although generous friends or relatives may help him or her). Proprietorships have unlimited liability, which makes the proprietor solely responsible for all debts of the business. Should bankruptcy occur, the owner’s personal assets – financial holdings, cars, house – may be forfeited to settle any debts. Losses may exceed what the proprietor has invested in the firm.