Customized financing to consolidate high-interest debt or fund major purchases or expenses.

Tailored commercial financing that supports all your business needs to help you grow quickly. 

Tailored for entrepreneurs that want to establish additional active and passive income streams.

Tailored for entrepreneurs that want to establish additional active and passive income streams.




Customized financing to consolidate high-interest debt or fund major purchases or expenses.

August 30, 2023

Ultimate Guide to Sole Proprietorships

Reasons to consider taking a loan to pay for a vacation

“America runs on small businesses” is a popular saying, but you might be surprised to learn just how much truth this statement holds. According to a recent study, there are over 33 million small businesses in the country—and they make up 99.9% of businesses in the United States.*

Here's another important statistic from the same report: over 80% of small businesses (27 million+) are non-employer firms, meaning they are run by a single individual with no additional employees.


8 out of 10 small businesses are run by one person


The owners of such organizations are described by the newly coined term “solopreneurs.” These individuals can be dedicated to their firms full time or use their businesses as a secondary source of income on top of their primary employment. 


How are non-employer businesses legally organized?

According to the most recent census data, over 86% of non-employer firms are sole proprietorships, and approximately 7% are partnerships.**

What is a sole proprietorship?

As defined by the IRS, a sole proprietor is someone who owns an unincorporated business by himself or herself. It’s a popular business structure among sole owners of small businesses, individual self-contractors, and consultants.

A sole proprietorship is easy to establish, with few regulatory burdens. Minimal paperwork is needed at inception, particularly if you take the more simplistic approach by:

  • Choosing to use your full legal name as the business name—It’s a fine option for many non-employer businesses. However, selecting a business name other than your full legal name can be beneficial. It can help with your marketing efforts and to establish a separation between your business and personal identities. Requirements to file a DBA (“doing business as”) vary from state to state. You should refer to the office of the secretary of state or county clerk where your business is located.

  • Using your Social Security number for tax purposes—The IRS only requires sole proprietors to have an EIN if they have employees or pay excise taxes. Take into consideration that any profits earned from your sole proprietorship will be taxed as personal income.

  • Conducting all your finances through a personal account—A business checking account is not necessary.

Also, keep in mind that the business owner of a sole proprietorship is not exempt from liabilities incurred by the business: a sole proprietorship is not a separate legal entity. In this case, the debt of the business is also the debt of the owner. There is no protection against creditors seizing the owner’s personal assets, such as their home.

Note: We highly recommend consulting with legal and tax professionals on the pros and cons of this particular business setup before making any final decisions.

Many small businesses start as sole proprietorships and either maintain this structure or expand and transition into a limited liability entity or corporation, which provides liability protection to their owners.

IRS resources

If you are a sole proprietor, the IRS provides a resource center to help you navigate tax forms that you may be required to file. For convenience, you can access them here: Sole proprietorship resources.

Financial aspects of non-employer firms—and how BHG Financial can help

Research conducted by Federal Reserve Banks, published in May 2023***, provides an overview of the financial needs and experiences of non-employer firms.

This next section utilizes key findings from the study to illustrate how fintech lenders like BHG Financial can help these small but mighty firms succeed.

Risk appetite

Generally, non-employer firm owners are risk averse, with 47% of survey responders reporting no debt and 25% reporting $25K or less in amount owed.³

The notion that debt is avoidable, particularly for profitable and growing businesses, is limiting. Certain types of debt can generate revenue and accelerate the expansion of your business. Long-term success, however, is dependent on proper debt management. And this comes from a combination of financial choices that you, as a business owner, can make to move your operation forward.

Balancing debt and savings

Furthermore, non-employer firm owners are overly dependent on their personal savings, so much so, that in the past 5 years, 69% have used their own funds to finance their business activities, and 22% have used funds from their friends or family.³


69% used their own funds to finance their business ventures

Note: Respondents of the survey could select multiple sources of funds.

You don’t have to risk personal financial security for a chance at future business success—or vice-versa. By working with an established financial partner, you can solidify your position and plan for what’s next simultaneously.

For some non-employer firm owners, lack of financial know-how is a hinderance to the rapid growth of their operations. They are likely razor focused on the overall strategy and the day-to-day, while financial management remains an afterthought and a persistent pain point.

At BHG Financial, we’re dedicated to all our clients, large or small. You can count on our team of trusted financial professionals, who are available 7 days a week, to guide you through the process and explain all your options so that you feel confident in your financial decisions.

Choosing a lender

When non-employer firms decide to shop for a loan, 38% do so at large banks (defined as those with at least $10B in total deposits), while many others (32%), turn to fintechs—these are nonbanks that primarily operate online.³

Powered by innovation and focused on our client experience, BHG Financial is a direct lender that encompasses the best of both traditional banks and fintechs. We offer our customers speed and efficiency as well as reliability and industry-leading concierge service.

Reasons to consider a fintech according to non-employer firm owners

Most frequently, non-employer firm owners who pursue funding at large banks cite their existing relationship with the lender as the primary reason for doing so. In turn, those who pursue funding at fintechs note more compelling reasons, including:

  • Fast decisioning and speed of funding—A quick and efficient lending process allows entrepreneurs to seize opportunities as they arise.

  • Access to money without personal collateral requirements—Fintech borrowers may not need to risk personal assets to finance their operations.

  • The ability to use funds in multiple ways on their terms—While traditional lenders may require financing to be used in a predetermined manner, fintechs place more trust in the customer, allowing for flexible use of funds with no oversight.

Why non-employer firm owners seek outside financing

Nearly 60% of individuals operating in this space seek outside financing for the purpose of expanding their businesses, pursuing new opportunities, or acquiring business assets. And simultaneously, many are solving for operational challenges.3 For example, more than half (57%) of non-employee companies find it difficult to reach customers and increase sales.

Regardless of your reason for searching for a loan, BHG Financial has a financial solution designed for you. From debt consolidation to financing for business upgrades and new opportunities, you can learn about all our business loans here.

Since 2001, we’ve been providing specialized financing for the unique needs of the country’s top professionals, and you can receive up to $500,0004,5 with flexible terms up to 12 years4 and concierge service.


1 Main, Kelly. “Small Business Statistics Of 2023.” Forbes, Accessed August 11, 2023. 

2 “Frequently Asked Questions.” U.S. Small Business Administration Office of Advocacy. Accessed August 11, 2023. 

3 “2023 Report on Nonemployer Firms: Findings from the 2022 Small Business Credit Survey.” 2023. Small Business Credit Survey. Federal Reserve Banks. Accessed August 11, 2023. 

4 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile. Finance amount may vary depending on the applicant's state of residence.

5 BHG Financial business loans typically range from $20,000 to $250,000; however, well-qualified borrowers may be eligible for business loans up to $500,000.

No application fees, commitment, or impact on personal credit to estimate your payment.

For California Residents: BHG Financial loans made or arranged pursuant to a California Financing Law license - Number 603G493.