Sole Proprietorship

Topics: Business law, Corporate tax, Sole proprietorship Pages: 2 (441 words) Published: March 26, 2013
Sole Proprietorship in the U.S.
A sole proprietor is an individual who owns an unincorporated business. There are nearly 23 million sole proprietorships, not counting single-owner farm businesses, in the United States, and many of these engage employees in addition to their sole proprietor owners. Sole proprietorships are subject to state laws regarding registration and licensing, which are similar but vary from state to state. Formation

Every state has its own code of business laws authorizing the formation and management of business entities. All states allow individuals to conduct business activities as a sole proprietor without forming an independent legal entity. The simplicity of forming a sole proprietorship is one of its chief attractions to many entrepreneurs. Some states require a sole proprietorship to obtain a statewide business license. In other states, business licensing is conducted by municipal agencies. Local licensing requirements may vary depending on the nature of the sole proprietorship business and its location. Name Registration

Sole proprietorships in all states may operate under an assumed or fictitious business name, referred to as a "doing business as," or DBA, name. In some states, this name must be registered with a state or local agency, but no registration is necessary in other states. A primary purpose of registering a DBA is to notify the public of the contact information for the individual who is responsible for the business activity. Registering a DBA does not create a separate business entity. Sole proprietors usually continue to hold bank accounts and sign checks and contracts in their own name, even if they operate their business under a DBA. Taxes

The income from a sole proprietorship business is taxed as personal income to its owner. The sole proprietor does not need to file separate income tax returns for the business, but rather reports her income and business expenses on Schedule C, the business profit and loss...
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