Sole Proprietorship

A Sole Proprietorship is a business that is owned and operated by one person. This type of entity is formed automatically when a person begins providing services or selling goods. No formation documentation is necessary and nothing is filed with the state. A Sole Proprietor has the most control over how the business is managed. There is no limitation on the Sole Proprietor’s liability, so he or she will be personally liable for all business obligations and debts. Likewise, if someone has a claim against the business, such as for breach of contract or negligence, the claim is essentially against the Sole Proprietor individually and s/he will be personally liable. The Sole Proprietor’s income is taxed as personal income; there is no additional tax on business profits.*