Sole Proprietorship
Sole proprietorship is the easiest and least expensive way to
start and operate a business. A sole proprietorship is owned by
one individual. There is no specific legal filing requirements
for sole proprietors who are doing business under their own
names. However, doing business a name other than the
owner’s, a trade name or Doing Business As (DBA) requires
registration with the County Clerk’s Office or other
appropriate office where the business is located. The filing fees
are usually minimal. Since the business is owned by one person,
the owner has total control of the operation. The business has no
existence apart from the owner. Therefore, the business ceases to
exist when the owner dies. Because the business and its owner are
considered the same entity, the owner is personally liable for
any business debts. The owner’s personal assets can be used
to satisfy any business obligations or court judgments against
the business. As a sole proprietor, you report any business
profit/loss on your individual tax return. Business losses can be
used to offset any income you earned form other sources.
Generally speaking, if debts and lawsuits are not a big worry,
sole proprietorship is a good choice, at least initially.
There’s nothing that will stop you from starting out as a
sole proprietor, and then changing (later) when it makes good
business sense to do so.
