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Corporate Structure - Sole Proprietorships
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Back to Corporate Structure Sole Proprietorships

Answers and Information

A sole proprietorship is the simplest of business structures; it is an individual running a business that is not registered as a limited liability company (LLC) or a corporation. That is, freelance workers, independent contractors, and craftspersons that work on a contract only basis are all running sole proprietorships. The business obligations of a sole proprietor are not legally separated from his or her personal assets. This means that creditors can pursue personal assets if the business defaults on loans or payments and the negligent actions of employees can expose the personal assets of the owner to liability. Because of this, if there is serious risk involved in a business endeavor, the own should consider a corporation or LLC, which provide more personal protection. The majority of cities and counties require any business, even small sole proprietorships, to register and pay at least a nominal tax. If the name of a sole proprietorship is different from the name of the owner (“Crazy Paints” instead of Sally Roberts Painting), the owner may need to register the name (referred to as a fictitious name) with the city or county. Other responsibilities may include needing to obtain an employer ID number from the IRS, a license to sell from the state, and possible zoning permits. While many businesses get away with avoiding these laws because they are so small, it is a gamble they are taking. If caught, they may be subject to fines, back taxes, and other penalties.
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Corporate Structure Resource Center

Sole Proprietorships
A guide to Sole Proprietorships.

Partnerships
A guide to Partnerships.

Corporations
A guide to Corporations.

Limited Liability Companies - LLCs
A guide to Limited Liability Companies (LLCs).

Non Profits
A guide to Non-Profit Organizations.

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