The main disadvantage of forming a sole proprietorship is that the owner is personally liable for all debts and obligations of the enterprise. All of the personal assets and assets devoted to the social enterprise can be seized to make payments. A sole proprietorship itself may not be sold since there is complete unity between the enterprise and its owner, but the assets used in the enterprise may be sold. Furthermore, a sole proprietorship terminates upon the death of its owner.
A sole proprietorship must be legally authorized to do business in New Mexico in order to be eligible to apply for, renew or retain a license. On the death of a sole proprietor, the license shall automatically cancel. New Mexico has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing. For help with state licensing and business registration requirements in New Mexico, see the contact information for the offices of the Office of the Superintendent, New Mexico Department of Regulation and Licensing.