Sole Proprietorships Happen By Default, Putting You At Risk.
Sole Prop's, as they are casually known, are your legal status if you are an individual doing business but have not filed anything with any State. Your liability is limitless and therefore they are dangerous. But the good news is that it is easy to incorporate a business and get limited liability. Call us to find out how.
Sole Proprietorship Definition
A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest form of business organization to start and maintain. The business has no existence apart from you, the owner. Its liabilities are your personal liabilities and you undertake the risks of the business for all assets owned, whether or not used in the business. Include the income and expenses of the business on your own tax return. For more information on sole proprietorships, see the IRS Publication 334, Tax Guide for Small Businesses. If you are a farmer, see the IRS Publication 225, Farmers Tax Guide.
Business profits or losses of a sole proprietorship are reported on Schedule C, Schedule C-EZ, or Schedule F of Form 1040, U.S. Individual Income Tax Return. A sole proprietor may also be required to file other returns (such as employment or excise tax returns).