Sole Proprietorship

If you are the sole owner of a business, and you have not formally created either a corporation or an LLC, you are operating a sole proprietorship. Sole proprietorships cannot themselves own any assets; therefore, all of the business assets will be considered your personal property. All of your assets--business and personal--are subject to the claims of all of your creditors--business and personal.

Characteristics= One owner. Simplest business form. No formal requirements to create or operate this form. Owner has unlimited, personal liability for all of the business's debts. Owner personally hires all employees, and thus the owner has unlimited, personal liability for the acts of employees. For these reasons, this form should usually be avoided.

Not a separate taxpaying entity: Income is reported on the owner's personal tax return, which may result in lower taxes, and does not require the filing of a separate tax return.

©2003, CCH INCORPORATED.

Published in accordance with the terms and conditions of the

CCH Business Owner’s Toolkit User Agreement

Website maintained by Kolita & Company, CPAs
8300 Tyler Boulevard, Suite 101, Mentor, Ohio 44060
Phone: 440-205-8299   Fax: 440-974-7674