August 23, 2022
Reading time: 3 mins

As a business owner, you may have noticed providers using different terms to describe their ideal customers: small business owner, self-employed, independent contractor, solo entrepreneur, etc. What do these terms mean exactly, and which one are you? 

The answer to that question matters. Self-employed individuals and small business owners have different needs, and providers take that into account when designing and marketing their products. When looking for business financing, customer financing, insurance, hiring software, and other business products, knowing which providers work with businesses like yours not only saves time - it ensures you are matched with the right product, at the right time, for the right price. 

In a nutshell…

All small business owners are self-employed, but not all self-employed individuals are small business owners. 

If you’re self-employed, you are the business - you work alone and have no additional help. As a small business owner, you work for your business, but you also rely on people who do not own the business (i.e. employees or contractors) for help running the business. 

Self-employed examples:

  • Sole Proprietor: A sole proprietor is essentially a one-person business. Legally, the owner and the business are not separate entities, which means you really are your business. All decision making power rests with you, and you are personally liable for all debts and obligations of the business.
  • Independent Contractor: An independent contractor is an individual who produces work for another person but isn't considered an employee. Contractors are also known as freelancers because they maintain the power to end their association with any business whenever they want, and can work for multiple companies simultaneously, or just one.
  • Partnership: A partnership is an arrangement that allows two or more individuals to own a business together. As with sole proprietorships, there is no distinction between the partners and the business; partners are the business. As a result, partners report their share of business profits as self-employment income on their personal tax forms.  

Small business owner characteristics:

  • You hire other people to work for you, either as employees or independent contractors
  • Your business can be defined as a separate legal entity, meaning you have less personal liability
  • Given that contractors are self-employed, they don’t require benefits. However, as a small business owner, if you have part-time or full-time employees, you are responsible for withholding their taxes and providing benefits, such as workers’ compensation insurance


Business products and services are designed with an end user in mind. Some providers cater to several types of customers, but self-employed individuals and small businesses are often overlooked. That’s why it’s always a good idea to work with providers that cater to you explicitly (e.g. “for sole proprietors and contractors”), as they are more likely to meet your specific needs.

If you want personalized recommendations for your business, reach out to and tell us about yourself - we can find a solution to your problem. Schedule a free consultation (in English or Spanish) so we can learn more about your business and improve our offers.