First of all, let’s define what is a sole proprietorship. In Luxembourg, a sole proprietorship indicates a person carries out his activity in his own name, whether he is a trader, a skilled craftsman, an industrialist, a farmer or a self-employed intellectual worker (liberal professions like doctor, architect, auditor, engineer or… accountant!).
Sole proprietorship guarantees you a total independence. You take decisions alone and have sole responsibility for the financing of your business. Another advantage is the lack of formalities. No minimum capital is required; you alone decide to commit capital to your business. No constitutional document is required; you are acting in your own name.
There are nevertheless important risks. You alone assume full responsibility towards third parties (debts of your business). Liability is not limited to your contribution and all your personal assets are exposed to creditors. That’s why you need to keep right and transparent accounts.