What is a Sole Proprietorship?

A business that legally doesn’t have separate existence from its owner. Income and expenses are reflected in the personal income tax return. The sole proprietorship is the simplest form of business in which one can manage a business. Also, the sole proprietorship is not a legal entity. It just refers to a person who owns a business and is personally responsible for its debts.

A sole proprietorship may operate under the name of its owner or engage in business under a name. The fictitious name is simply a trade name–it does not create a legal entity separately from the sole proprietor owner.

The sole proprietorship is a popular form of business due to its simplicity, ease of setup, and nominal cost. The sole proprietor must only register his or her name and secure local licenses, and the sole proprietor is ready for business. However, a significant drawback is that the owner of this type of business is personally responsible for all the debts of the business. Thus, if a sole proprietor has financial problems, creditors can sue the business owner. If such claims are successful, the owner will have to pay the debts of the business with his or her own money.

DOT Filing can help you with obtaining your Sole Proprietorship. Give us a call today at 818-568-0644 and we will be more than happy to help!