Sole Proprietorships
The simplest form of business entity is the sole proprietorship.
If you choose this legal structure, then legally speaking you and
the business are the same. You can continue operating as a sole
proprietor as long as you're the only owner of the business.
Establishing a sole proprietorship is cheap and relatively
uncomplicated. While you do not have to file articles of
incorporation or organization (as you would with a corporation or an
LLC), you may have to obtain a business license to do business under
state laws or local ordinances. States differ on the amount of
licensing required. In California, for example, almost all
businesses need a business license, which is available to anyone for
a small fee. In other states, business licenses are the exception
rather than the rule. But most states do require a sales tax license
or permit for all retail businesses. Dealing with these routine
licensing requirements generally involves little time or expense.
However, many specialized businesses -such as an asbestos removal
service or a restaurant that serves liquor - require additional
licenses which may be harder to qualify for.
In addition, if you're going to conduct your business under a
trade name such as Smith Furniture Store rather than John Smith,
you'll have to file an assumed name or fictitious name certificate
at a local or state public office. This is so people who deal with
your business will know who the real owner is.
From an income tax standpoint, a sole proprietorship and its
owner are treated as a single entity. Business income and business
losses are reported on your own federal tax return (Form 1040,
Schedule C). If you have a business loss, you may be able to use it
to offset income that you receive from other sources.
- Partnerships
- Corporations
- Sole Proprietorships
- Incorporation Basics
- Naming your Business
- Writing a Business Plan
- Limited
Liability Companies
- Complying with Zoning Laws
- Getting
Licenses and Permits
- Why Form a Nonprofit Corporation?
-
Choosing Between a Corporation and an LLC
- Leases and Rental Agreements: An Overview
