Definition of Sole Proprietorship Partnership
Most people know sole proprietorship and a partnership to be two separate business descriptions. However, another description has arisen--the sole partnership. It is essentially a fancy way of saying sole proprietorship.
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Benefits
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A sole partnership has the benefit of being simpler than a partnership. There is also one owner to contend with in a sole partnership. This owner runs the business on his own behalf.
Disadvantages
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Like a sole proprietor, the business owner in a sole partnership takes the burden of the business debt and taxes upon himself. The partnership allows two or more people to split the liability. Limited partners only share some of the liability and are more similar to a corporation in description.
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Misconceptions
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It is believed that the sole partnership simply makes it easier to add a partner later, than would a sole proprietorship. This is untrue. States do not recognize sole partnerships as such. They are classified as sole proprietors. Thus the transition from sole partner to partner is no different than sole proprietor to partner.
Considerations
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Unless it is in keeping with industry standard in your line of business, it is wise to call your business a sole proprietorship, not a sole partnership. This will help curtail the confusion among those not "hip" to the modern business lingo.
Warning
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The Internal Revenue Service does not recognize sole partnerships. Moreover, when filing taxes for your business, file the sole partnership as a sole proprietorship or you will penalized.
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