Sole Proprietorship

A sole proprietorship is the most common and simplest form of business structure. A sole proprietorship exists when a single individual who owns all of the business’s assets engages in business activity without the necessity of having to have a formal organization.

A sole proprietor is personally liable for all debts and liabilities. Under a sole proprietorship, there are no legal distinctions between personal debts and business debts, and there is no requirement to file a separate federal income tax return. Business ownership is nontransferable in that an individual cannot transfer his tax identification number to another person or entity- a new tax identification number will be required. For similar reasons, the life of the business is limited to the life of the sole proprietor.

A sole proprietorship is often operated under the name of the owner. If a sole proprietorship conducts business under a name other than the surname of the individual owner, then it is necessary to file an “Assumed Name Certificate” (commonly referred to as a “DBA certificate”) with the office of the county clerk where a business premises is maintained. If no business premise is maintained, then an assumed name certificate should be filed in all counties where business is conducted under the assumed name. More information available on registration of an assumed name certificate with your local county clerk’s office in the following pages.

Sole proprietorships are not subject to state franchise tax unless single member LLC is filing as a sole proprietor for federal income tax purposes.