What is a sole proprietorship?
A sole proprietorship is the business or an individual who has decided not to carry his business as a separate legal entity, such as a corporation, partnership or limited liability company. This kind of business is not a separate entity. Any time a person regularly provides services for a fee, sells things at a flea market or engage in any business activity whose primary purpose is to make a profit, that person is a sole proprietor. If they carry on business activity to make profit or income, the IRS requires that you file a separate Schedule C "Profit or Loss From a Business" with your annual individual income tax return. Schedule C summarizes your income and expenses from your sole proprietorship business.
As the sold proprietor of a business, you have unlimited liability, meaning that if your business can't pay all it liabilities, the creditors to whom your business owes money can come after your personal
assets. Many part-time entrepreneurs may not know this, but it's an enormous financial risk. If they are sued or can't pay their bills, they are personally liable for the business's liabilities.
A sole proprietorship has no other owners to prepare financial statements for, but the proprietor should still prepare these statements to know how his business is doing. Banks usually require financial statements from sole proprietors who apply for loans. A partnership needs to maintain a separate capital or ownership account for each partners. The total profit of the firm is allocated into these capital accounts, as spelled out in the partnership agreement. Although sole proprietors don't have separate invested capital from retained earnings like corporations do, they still need to keep these two separate accounts for owners' equity - not only to track the business, but for the benefit of any future buyers of the business.
Terms of Use for this Private Label Article
Possibly Related PLR Articles:
Keyword Research That Works
On the internet, keywords are terms or words that
relate to particular topics. Keyword research will
involve various aspects, such as finding sales
oriented keywords or driving maximum qualified
users to increase their online sales.
...read more
Google Adsense: Why it is Important to Get Approved for the Program and the Advantages of Not Getting Your Own Blog
Why Do I Have to Get Approved for the Google Adsense Program
It's not really about you. Google has standards to which they adhere and there are certain sites that they don't want their advertiser's ads on. Check the Program Policies for an...read more
Avoiding Extra High Financing Costs
Did you know that there are ways for you to pay less while you own more? If you know exactly how to work with the real estate market, then you can also find ways to avoid extra financing costs. By finding the right area to focus on for your...read more
Help With Data Recovery
If you've had something bad happen to your hard drive and find yourself looking for data recovery help, your probably in a hurry, not wanted to listen to hype or schemes. Many individuals who have experienced the loss of their data cannot wait, and...read more
Ring of Kerry Golf & Country Club: Irelands Secret Treasure
Playing a round of golf can be a very relaxing activity and more and more people have been hooked on the game and have seen it as a form of therapy, an exercise and a means to discipline one's self. This is because the game requires an intense...read more
Creating a Travel Plan for Your Mexico Vacation
Planning is key to enjoying a great vacation when visiting Mexico. Taking the time to plan your trip ahead of time is the best way to enjoy your vacation. Planning is not only needed to enjoy your vacation, but to stay within your budget, have...read more
Blending Cultures is the Key to Frisco's Greatness
Cultural activities and events abound in the great city of San Francisco. There are even plenty of museums that not only promote awareness of the diverse cultures of this great city but also celebrate the contributions of these people to what this...read more
How to Manage Slip Disks in Back Pain
Slip disks is a problem that causes back pain, yet it is one of the many variants as to why back pain starts. Once doctors decide is a disk is slipped they often assign management schemes to the patient. It is important that the patient follow the...read more
The Best Way to Make Custom Corporate Gifts
When you visit the portals of the market and look for gifts, all you would ever see are myriads of things that not only look the same old, boring items but appear cheap and lack specialized touch. When the gift you are looking is intended as a...read more
HYGIENE OF DIGESTION.
With the stomach and other digestive organs in a state of perfect health, one is entirely unconscious of their existence, save when of feeling of hunger calls attention to the fact that food is required, or satiety warns us that a sufficient amount...read more