What is a sole proprietor?
A sole proprietor is someone who runs their own business with themselves as the sole owner. They do not run their business as a Trust, partnership or a corporation which are the other main structures a business can be run through. As a Sole Proprietor you make your own decisions and all the profits will go into your own bank account. You are taxed on all business profits as an individual. A sole proprietor is someone who is personally responsible and liable for all the debts of their business so they have to cover any losses from their own personal assets. It means that if there are any problems and debts are run up, then creditors can bring claims against personal assets such as the home and anything else that are owned personally, even if it is not in the business.
A sole proprietor is someone who runs their own business, as the sole owner. They do not run their business as a trust, partnership or company which are the other main structures a business can be run through. As a sole proprietor you make your own decisions and all the profits will go into your own bank account. You are taxed on all business profits as an individual. A sole proprietor is someone who is personally responsible and liable for all the debts of their business so they have to cover any losses from their own personal assets. It means that if there are any problems and debts are run up, creditors can bring claims against personal assets such as the home and anything else owned personally, even if it is not in the business. As sole proprietor you do not need to be registered and there are no legal costs in setting up. You simply set up as a business and a name, open your doors and commence operations. There are many advantages in being a sole owner.
A sole proprietor is an individual operating a business by himself or herself without a business entity. The business is the owner, and as such, although the owner has complete control over the business, he or she is totally responsible for hte liabilities and debts of the business. In addition, the owner only has to file an individual tax return in connection wiht the business of a sole proprietorship.
If you own your own business and have not incorporated or formed a partnership or other legal entity, then you are a sole proprietor. You would be registered with your first and last name doing business as (DBA) the name of your business (for example: John Doe, d/b/a The General Store). Sole proprietors will usually use their social security number as their federal identification number, unless they have employees. The profit or loss on the business would be reported on their individual income tax return.
The vast majority of home businesses fall under “Sole Proprietor”. This is an unincorporated business owned by only one person. If you share ownership with anyone else, even if that person is your spouse or other relative, your business will not be one of a sole proprietor. When you run your business as a sole proprietor, you can conduct all your business under your own personal name, or under a trade business name. If you are running a pet sitting business, you can run your company under your personal name of Jane Doe, Dog Sitter. Or you can use a business name such as Perfectly Precious Pet Sitting. From a legal and tax point of view, there is no difference between you and your business. You are the sole person making business decisions, thus the sole person responsible for your business. This means if your business goes bankrupt, that creditors can come after your personal assets, such as house, vehicle or any other possessions you own which are considered to have value.
