AND, if your friend want to hiring contractors, I don't think it is a Sole Proprietorship anymore. The best form to start is typically LLC - Limited Liability Company.
Your friend should do a lot of research before getting into any business. Because there are a lot of liabilities involved. Your friend needs to know all the facts so he/she can protect himself/herself. You can buy books to read, or consult with a lawyer. Utilize the 'first consultation fee' services, and a lot of laywers charge a flat fee for setting up your business for you.
Good luck.