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Saturday, May 21 2016

Sole proprietorship is the simpliest and the most common business structure. There is one owner, the sole proprietor. The business is unincorporated, and there is no legal distinction between the business and the owner.

Sole proprietorship is the easy and inexpensive way to start a business, and an owner can usually create one on his/her own. There are no formal action required to create or start a sole proprietorship. However, business owners still need to obtain any necessary license, permits, and doing business as (DBA) name, if they are operating under a name other than their own. The owner is entitled to all the business's profit and has complete control over the business and makes all decisions, including business strategy, concept, plans, and operations.

Tax filing for sole proprietorship is fairly easy. A sole proprietorship files a Schedule C, along with their Form 1040 that owner already file every year. Self-employment income is subject to self-employment tax.

Sole proprietorship has no legal separation between the proprietor and the business entity. Personal liability for all debts and obligations of the business is the owner's responsibility. The risk extends to any liabilities incurred as a result of the actions of employees. It is often difficult to invest in a sole proprietorship because the business owner can't sell business stock, and financial institutions are sometimes hesitant to lend or give credit because of a perceived lack of credibility if the business fails. On the other hand, having complete control over the business can sometimes be a burden. The proprietor is the one ultimately responsible for the growth and success. But, nevertheless the failure of the business.

Posted by: Take5 Financial Group AT 03:01 pm   |  Permalink   |  0 Comments  |  Email

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