Sole Proprietorship
Sole proprietorship is the easiest and least expensive way to start and operate a business. A sole proprietorship is owned by one individual. There is no specific legal filing requirements for sole proprietors who are doing business under their own names. However, doing business a name other than the owner’s, a trade name or Doing Business As (DBA) requires registration with the County Clerk’s Office or other appropriate office where the business is located. The filing fees are usually minimal. Since the business is owned by one person, the owner has total control of the operation. The business has no existence apart from the owner. Therefore, the business ceases to exist when the owner dies. Because the business and its owner are considered the same entity, the owner is personally liable for any business debts. The owner’s personal assets can be used to satisfy any business obligations or court judgments against the business. As a sole proprietor, you report any business profit/loss on your individual tax return. Business losses can be used to offset any income you earned form other sources. Generally speaking, if debts and lawsuits are not a big worry, sole proprietorship is a good choice, at least initially. There’s nothing that will stop you from starting out as a sole proprietor, and then changing (later) when it makes good business sense to do so.
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