A business that legally has no separate existence from its owner. Income and losses are on the individual’s personal income tax return. The sole proprietorship is the simplest business form under which one can operate a business. Also, the sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, such as Nancy’s Nail Salon. The fictitious name is simply a trade name–it does not create a legal entity separate from the sole proprietor owner.
The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure local licenses, and the sole proprietor is ready for business. A distinct disadvantage, however, is that the owner of this type of business remains personally liable for all the business’s debts. So, if a sole proprietor business runs into financial trouble, creditors can bring lawsuits against the business owner. If such suits are successful, the owner will have to pay the business debts with his or her own money.
DOT Operating Authority can help you with obtaining your Sole Proprietorship. We work with the Secretary of State all over the nation. Give us a call at 1-888-669-4383. We will be more than happy to help.