Sole Proprietorship

Simplicity is a Sole Proprietorship

A sole proprietorship is an individual (or married couple) who owns a business which is not otherwise incorporated or organized as a separate legal entity. In other words the sole proprietorship is a business entity that has no separate legal identity from its owner and are businesses where an individual conducts business and holds title to property in his or her name and is directly and personally liable for the obligations of the business. There can be only one owner (in community property states, joint ownership with a spouse still qualifies as a single owner).

Despite the personal liability that comes with the sole proprietorship, this form can be preferable where the owner contemplates no complex financing and no co-owner relationships with other parties. Maintenance costs are very low for the sole proprietorship. Apart from any “doing business as” filings necessary if the sole proprietorship is using a name different from that of its owner, no documentation is needed to organize a sole proprietorship and no special record-keeping or corporate formality is necessary. You would not even need an attorney to form this type of business entity. By hanging out a sign, you have opened up a sole proprietorship.

Sole Proprietorships are easy to form and may often be allowed to register an Assumed Name or DBA (Doing Business As name) to conduct business under. When and individual starts conducting business, you are automatically a sole proprietorship, if you have not created any other entity to operate your business under(spouses are generally considered as one).You may find that your tax burden can grow quickly. Self employment tax is maximized as a sole proprietorship.

But, if you are planning to have a business of any sophistication, you probably want to avoid this entity.