The Features of a Sole Proprietorship
In a sole proprietorship, the simplest legal business ownership structure, one individual creates and manages the business and retains personal liability for business debts. Specific sole proprietorship features depend heavily on the laws of the state of operation.
Other People Are Reading
-
Creation
-
Creation of a sole proprietorship is fairly simple, typically requiring that the proprietor obtain a business license from the city or county and register the assumed name of the business if the name differs from his own.
Liability
-
A sole proprietorship does not offer the proprietor any protection from business liability. Should the business have debts, or court judgments rendered against it, the sole proprietor's personal assets may be used to satisfy the debts.
-
Taxation
-
Sole proprietors generally do not pay any separate taxes for the business. Income earned through the business is taxed as the personal income of the sole proprietor. However, the proprietor may need to pay self-employment taxes and must submit a federal Schedule C form listing profits and losses.
Transfer and Termination
-
The law identifies a sole proprietorship with its owner, therefore the business typically will not continue beyond the owner's life. This identification also makes the business difficult to transfer to other parties.
-
