Sole Proprietorship
Definition of 'Sole Proprietorship'The sole proprietor is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners.Many sole proprietors do business under their own names because creating a separate business or trade name isn't necessary. Sole proprietorship is also known as "proprietorship". |
|
Investopedia explains 'Sole Proprietorship'There is no separate legal entity created by a sole proprietorship, unlike corporations and limited partnerships. Consequently, the sole proprietor is not safe from liabilities incurred by the entity. The debts of the sole proprietorship are also the debts of the owner. However, all profits flow directly to the owner of a sole proprietorship.The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding, specifically through established channels, such as equity (selling shares) and obtaining bank loans or lines of credit. As a business grows it often transitions to a limited liability company (LLC) or S corporation. |
Related Definitions
Articles Of Interest
-
Looking For Profit In Privately-Held Companies
Private companies offer unique opportunities for those with the knowledge and resources to take advantage. -
Can You Handle A Home-Based Business?
Find out if you have the traits to be a top entrepreneur. -
Start Your Own Small Business
Quit your job, be your own boss and earn a paycheck. Find out what to do to make it happen. -
Should You Incorporate Your Business?
Find out how becoming a corporation can protect and further your finances. -
Starting A Small Business
Starting a small business can be a daunting task. This tutorial will break the process down into easy steps. -
Don't Get Sued: 5 Tips To Protect Your Small Business
Find out what you can do to limit risk and keep your business running smoothly. -
Benefits Abound For Active Traders Who Incorporate
Trading through a separate business structure allows active traders access to all of the tax mitigation and asset protection strategies available. -
The Basics Of Corporate Structure
CEOs, CFOs, presidents and vice presidents: learn how to tell the difference. -
Holding Titles On Real Property
Find out how best to claim and convey ownership on your assets. -
What's the difference between publicly- and privately-held companies?
Privately-held companies are - no surprise here - privately held. This means that, in most cases, the company is owned by the company's founders, management or a group of private investors. A ...
Free Annual Reports