Sole Proprietorship

The sole proprietorship is perhaps the most common form of business ownership.

Conducting business as a sole proprietor has distinct advantages and disadvantages.

You should be aware of these characteristics, as they can have a significant

impact on your business. Please note that brief references appear in this article

to corporations, another form of business ownership.

What is a sole proprietorship?

A sole proprietorship is an unincorporated business owned by one person

(hence, the term sole). The owner of a sole proprietorship is known

as a sole proprietor. If you conduct your business through a corporation,

your business will not be a sole proprietorship. If you share ownership of

your business with someone else, including your spouse, your business will

not be a sole proprietorship.

The most important feature of a sole proprietorship is that the law

makes no distinction between you, the sole proprietor, and your business.

Virtually all the legal and tax consequences associated with sole proprietorships

flow from this essential element.

As a sole proprietor, you can conduct business under your own name

or under a trade name. For example, you are a cleaner.

You can conduct business under your own name, eg Clare Johnson, Cleaner.

Or, I can conduct business under a trade name, such as Residential Cleaner

. In either case--whether you conduct business under your own name or under

a trade name--if you are the sole owner of an unincorporated business, your

business will be a sole proprietorship, and you will be the sole proprietor.

A sole proprietorship can hire any number of employees. Because the law

makes no distinction between you, the sole proprietor, and the business,

you are not considered an employee. Sole proprietorships may also hire any

number of independent contractors. (The difference between employees and

independent contractors will be discussed in a future article.)

Whether you have zero or 100 employees (or independent contractors

makes no difference. If you are the sole owner, your business will still

be a sole proprietorship.

IRS Representation

We provide elctronic account resolution with the IRS for:

Penalty Information/Computation

Mixed Entity Period

Misapplied payment/Credit Transfer

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