Sarbanes-Oxley Act Regulations & Sole Proprietorship

The Public Company Accounting Reform and Investor Protection Act of 2002, also known as the Sarbanes-Oxley Act, is a piece of U.S. legislation that deals with creating new standards of accountability for companies. Not all companies are covered by the law, and among those excluded from it are sole proprietorships.

Definition

A sole proprietorship is any business that, along with its individual owner, are considered a single entity for tax purposes. The owner of a sole proprietorship does not pay income taxes separate from her business.

Exclusion

Sole proprietorships are excluded from the regulations of the Sarbanes-Oxley Act, which mainly targets the auditing processes of larger businesses. Limited liability corporations (LLCs) are also excluded from the act's regulations.

History

The Sarbanes-Oxley Act was originally introduced in the Senate by Sen. Paul Sarbanes of Maryland and in the House by Rep. Michael Oxley of Ohio. The act was signed into law by President George W. Bush on July 30, 2002.

References

• What is the purpose of the Sarbanes-Oxley Act, and which businesses are impacted by it?
• Bill Text: Public Company Accounting Reform and Investor Protection Act of 2002
• Investor Words: sole proprietorship definition