In General:This is the simplest form of business. A sole proprietorship is not a separate entity itself. Rather, a sole proprietor directly owns the business and is directly responsible for its debts.
Unlimited Personal Liability for Loss:In a sole proprietorship, the owner is personally liable for the company, thus placing his or her entire personal assets and wealth at risk. If an owner is married, that owner puts the community property at risk as well.
Management and Control:The owner (sole proprietor) has total management and control over the company. However, the price for total management and control is that the owner is at risk for personal liability incurred through the acts of the owner’s agents or employees.
No Formalities:With the exception of complying with any applicable licensing requirements, there are no formalities required of a sole proprietorship. Note, however, where the business is conducted under a name which does not show the owner’s surname or implies the existence of additional owners, California, for example, requires that the owner file a fictitious business name statement and publish notice.
Taxes: The sole proprietor pays maximum taxes to include self employment, social security, ordinary income, and too many others to list.
Transferability: The owner can sell the business as he or she pleases.
Duration: The sole proprietorship remains in existence for as long as the owner is willing or able to stay in business.
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