{"id":1411,"date":"2017-01-09T19:42:38","date_gmt":"2017-01-09T19:42:38","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/montgomerycollege-masterybusinesslaw2\/?post_type=chapter&p=1411"},"modified":"2017-01-09T19:42:38","modified_gmt":"2017-01-09T19:42:38","slug":"sole-proprietorship","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/montgomerycollege-masterybusinesslaw2\/chapter\/sole-proprietorship\/","title":{"raw":"Sole Proprietorship","rendered":"Sole Proprietorship"},"content":{"raw":"
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Learning Objective<\/h3>\n
  1. Describe the sole proprietorship form of organization, and specify its advantages and disadvantages.<\/li>\n<\/ol><\/div>\nA sole proprietorship<\/span><\/span> is a business owned by only one person. The most common form of ownership, it accounts for about 72 percent of all U.S. businesses. It\u2019s the easiest and cheapest type of business to form: if you\u2019re using your own name as the name of your business, you just need a license to get started, and once you\u2019re in business, you\u2019re subject to few government regulations.\n
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    Advantages and Disadvantages of Sole Proprietorships<\/h2>\n
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    Factors<\/h2>\n<\/td>\n

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    Consideration<\/h2>\n<\/td>\n<\/tr>

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    Start-up<\/h3>\n<\/td>\n

    		Easy and cheap to form<\/td>\n<\/tr>
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    Control<\/h3>\n<\/td>\n

    		Owner has complete control over business<\/td>\n<\/tr>
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    Benefactors<\/h3>\n<\/td>\n

    		Owner receives all income earned by the business<\/td>\n<\/tr>
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    Taxation<\/h3>\n<\/td>\n

    		Profits earned are taxed as personal income (no any special federal and state income taxes are incurred)<\/td>\n<\/tr>
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    Capability<\/h3>\n<\/td>\n

    		Owner must supply all talents necessary to make the business a success.<\/td>\n<\/tr>
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    Sustainability<\/h3>\n<\/td>\n

    		If the owner dies, the business dissolves<\/td>\n<\/tr>
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    Financing<\/h3>\n<\/td>\n

    		All money borrowed by the business is loaned personally to the owner<\/td>\n<\/tr>
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    Liability<\/h3>\n<\/td>\n

    		Unlimited personal liability for losses incurred by the business or for any legal action<\/td>\n<\/tr><\/tbody><\/table>\nThe sole proprietor bears unlimited liability<\/span><\/span> for any losses incurred by the business. The principle of unlimited personal liability means that if the company<\/em> incurs a debt or suffers a catastrophe (say, getting sued for causing an injury to someone), the owner<\/em> is personally liable. As a sole proprietor, the owner puts his or her personal assets (bank account, car, maybe even home) at risk for the sake of the business. The owner can lessen the risk with insurance, yet the liability exposure can still be substantial.\n
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    Key Takeaways<\/h3>\n