What is a Sole Proprietorship?

A sole proprietorship is an unincorporated business that is owned by an individual.  It is the simplest form of business organization to start and maintain.  The business has no existence apart from you, the owner.  The 0wner is personally liable for all liabilities and you take the risk for all assets owned.  The owner includes the income and expenses of the business on their own tax return and pays self-employment tax on profit.

What Business Entity Should I Choose?

The advantages and disadvantages of each entity (sole proprietorship, C corporations, S corporations, partnerships, and limited liability companies) should be discussed between the accountant and business owner to determine tax implications of each.  An experienced attorney should be directly involved in providing advice on liability issues.  The accountant must be fully versed in the tax advantages and disadvantages of the various entities in order to advise the business owner which is the most appropriate.  Without a thorough review of the business by the accountant it is difficult for them to provide advice which entity is best.  Before deciding or changing your entity it is recommend you consult your accountant and legal professional.