The sole proprietorship is normally a one person business but is not limited to having just one person working the business. A sole proprietorship can hire other people as employees.
Under a sole proprietorship, an individual can use his own name to conduct business but if he decides to use a "Doing Business As" or "dba," he has to file a fictitious business name in the county recorder's office of the county the business is located in.
A dba gives the filer the right to use the fictitious business name anywhere within the boundaries of the county but only within that particular county.
If no one else is using the name at the time of the filing, the fictitious business name is granted to the filer and it is his to use.
If someone else uses the fictitious business name within the county, they can be forced by the courts to cease doing business under that fictitious business name within the county boundaries.
A sole proprietorship must file for an employer identification number (EIN) but the sole proprietorship is not considered an employee of the company, even though the company pays him a salary.
For income tax purposes, your business expenses and your income are included on your personal tax returns, Form 1040. They are listed under the Schedule C and filed with the 1040.
Some losses from your business may be used to offset gains from other sources of income.
The Internal Revenue Service has devised a plan for estimated income tax payment to be paid four time during the year, on the 15th day of April, June, September, and January.
This allows the sole proprietor to make payments on his income tax liability throughout the year and not be burdened with one large tax bill at the end of the tax year.
The sole proprietorship is the most common way of doing business in the country, but it probably the most disadvantageous.
For one thing, the owner is liable for any claims brought against the company and is personally responsible for all financial obligations.
Sole proprietorships have a more difficult time borrowing money to support their business because banks and other lending institutions are reluctant to loan them money.
The sole proprietorship is probably the best business structure for you if you are going to work your business alone.
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