Sole Proprietorship

Description of a Sole Proprietorship:  A sole proprietorship is a business that is simply owned and operated by a single person.  A sole proprietorship is not incorporated. The owner and the business are deemed to be the same person under the law. The owner of the business, or owner of the sole proprietorship, receives all profits, if any, from the business.  Although sole proprietorship is an easy and inexpensive way to start a business, the owner does accept all risk for the business.  The owner is responsible for all debts, liabilities, and losses of the business.  The Law Offices of Clifton Black, PC strongly encourages business owners to avoid operating a business as a sole proprietor because if the business fails, the creditors can come after the business owner for the debts.  A sole proprietor could lose personal assets to cover the debts of the company, including their home, money in banks, and garnishments against paychecks.

FORMING A SOLE PROPRIETORSHIP

An owner of a sole proprietorship does not have to take any formal action to be a business owner or a sole proprietor.  Merely operating a business as an individual person without creating a formal business entity makes a person a sole proprietor.  If a person elects to open a lawn mowing business to earn some extra cash, that person is acting in the capacity of a sole proprietor.
However, a sole proprietor would still need to comply with licensing requirements.  For example, a contractor that is remodeling a bathroom may still need to possess a contractor’s license and obtain building permits when required for certain work. Different industries may have different regulatory agencies and regulations that need to be followed, which could be federal, state and local.

Many sole proprietors want to operate under a company name. The sole proprietor should create a DBA (doing business as), a trade name, or fictitious name.

SOLE PROPRIETOR TAXES

Income from a sole proprietorship is not taxed at the business level. The income is deemed income of the individual and the individual pays income taxes.  The sole proprietor is able to deduct expenses related to the business.

Call the Law Offices of Clifton Black, PC today

Are legal challenges holding back your business growth? Our expert team at the Law Offices of Clifton Black, PC is here to empower your business with strategic legal solutions tailored to your needs. Schedule your comprehensive consultation today with Cliff Black to discuss your legal and business needs to tailor a plan of action to help you navigate complex regulations, contracts, and disputes.

During your consultation you will:

  • Discover personalized legal strategies to safeguard your business interests.
  • Partner with an experienced attorney dedicated to your success.
  • Propel your business forward by mitigating risks and seizing opportunities.

Don’t let legal hurdles hinder your progress. Take action now and pave the way for a thriving future. Call (719) 328-1616 today for a consultation and let’s embark on this journey together!

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