Define Sole Ownership
Sole ownership or sole proprietorship businesses are one of the "most popular forms of business ownership," according to website Entrepreneur.com. A sole ownership business can operate under the name of the owner or under any other name the owner chooses. The name may reflect the nature of the business or in some cases highlight a service or product.
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Definition
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A sole ownership or proprietorship business is owned and operated usually by one individual and where there is no legal distinction between the owner and the business. All the profits and losses accrue to the business owner, and assets and liabilities are also the responsibility of the business owner. A sole owner business may or may not have additional employees other than the business owner.
Tax Returns
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Tax returns for sole ownership business easier to complete. Tax filings for sole ownership business require a two-page Internal Revenue Service (IRS) form, "Schedule C" to be completed, according to the IRS website. The Schedule C and instructions on how to complete the form are available on the IRS website.
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Dissolving Sole Ownership
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Dissolving a sole ownership business is extremely easy and straight forward. The owner simply stops conducting business. When the business is opened, there is no need to register the company and subsequently there is no need to register the end of the business. The owner is responsible any outstanding debts at time of dissolution.The owner may choose to sell off assets of the company if any exist, to pay off debts, according to the IRS website.
Decision Making
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As the sole owner decision making for the company is straight forward. You alone can decide whom to hire, fire, determine where to spend or invest money as well what jobs or contracts you want to bid on.
Disadvantages
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The most significant disadvantage to a sole ownership is the "unlimited personal liability for the debts, losses and liabilities of the business," according to the website Entrepreneur.com. Because there is not distinction between personal and business assets, the owner of the business may lose personal assets to offset debts. According to the IRS website, personal property and assets "may be seized" as a result of an audit.
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References
Resources
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