Sole Proprietorship, individual entrepreneurship, a sole trader, is an unincorporated business owned and run by a single individual. It is the simplest form of enterprise when it comes to set-up and tax payments. However, since the individual and business are considered the same in a sole proprietorship, the individual is accountable for any losses, debts, and liabilities.
Sole Proprietorship requires you to have all the necessary licenses and permits in place. Next Level Tax helps you acquire federal, state, local registrations, permits, and licenses. In case you intend to function under a different name, you can file a fictitious name or a DBA (Doing Business As); this has to be an original unclaimed name.
On time services
Having a single entity also implies that you are not taxed separately. You report income, losses, and expenses with Schedule C and the standard Form 1040. You are responsible for paying all income taxes, which includes self-employment and estimated taxes.
Easy to form
A sole proprietorship has the simplest and least expensive business structure to set up, with a legal cost limited to acquiring permits or licenses.
Owners can make autonomous decisions. You can make all the decisions without the need to consult with anyone.
Easy tax preparation
As a single entity, you can easily file for taxes. The tax rates are also the lowest among business structures.
Unlimited personal liability
Being a single entity, you are personally accountable for all debts and liabilities incurred during the business, even to the extent of employee actions.
Difficult to raise money
Perceived lack of credibility and inability to sell stock are the main reasons why Banks and investors refuse a credit line.
Despite raking in all the profits, the burden of losses lies in you. Ultimately you determine your business success and failure.