{"id":2570,"date":"2015-06-08T15:53:58","date_gmt":"2015-06-08T15:53:58","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&p=2570"},"modified":"2017-04-18T19:54:19","modified_gmt":"2017-04-18T19:54:19","slug":"sole-proprietorships","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-hccc-introbusiness\/chapter\/sole-proprietorships\/","title":{"raw":"Sole Proprietorships","rendered":"Sole Proprietorships"},"content":{"raw":"
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\r\n\r\nA sole proprietorship is the simplest and most common legal\u00a0structure someone can choose. It's an unincorporated business owned and run by one individual in which there is no distinction between the business and the owner. If you own a sole proprietorship, you are entitled to all profits and are responsible for all your business\u2019s debts, losses, and liabilities.<\/span>\r\n

Forming a Sole Proprietorship<\/strong><\/span><\/h2>\r\nYou don't have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically arises\u00a0from your business activities. In fact, you may already own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor.<\/span>\r\n\r\nAs is the case when you own\u00a0any kind of business, you may need to obtain the necessary licenses and permits. For example, certain businesses, like ones that sell alcohol or firearms, require a federal license or permit. Some states have requirements for other specific businesses. Additionally, some professions such as Certified Public Accountants (CPAs) may have licensing or certification requirements that must be met before you can promote yourself as engaging in that business or trade. Regulations vary by industry, state, and locality.\u00a0<\/span>\r\n\r\nIf you choose to operate under a name different from\u00a0your own, you will most likely have to file a\u00a0fictitious name<\/a>\u00a0(also known as an assumed name, trade name, or DBA name\u2014short for \"doing business as\"). \u00a0This document is usually filed in the records of the county or city in which you do business. This requirement exists\u00a0because if customers want to contact (or sue) the person running the business, the law requires the owner to\u00a0inform the public of the person behind the \"business.\" You must choose an original name; it cannot already be claimed by another business. In order to check the availability of a business name, business owners may search the database maintained by the State Secretary of State.\u00a0<\/span>\r\n

Sole Proprietor Taxes<\/strong><\/span><\/h2>\r\nBecause you and your business are one and the same, the business itself is not taxed separately\u2014the sole proprietorship income is your<\/em> income. \u00a0It\u2019s your responsibility to withhold and pay all income taxes, including self-employment\u00a0and estimated taxes.\u00a0<\/span>\r\n

Advantages of a Sole Proprietorship<\/strong><\/span><\/h2>\r\n