Sole Proprietorships

Sole Proprietorships

• A sole proprietorship is the simplest and easiest business type to start.
• It is estimated that 70% of businesses in the United States are sole proprietorships.
• A sole proprietorship is not a separate legal entity, but an unincorporated business owned and controlled by one person.
• It can be a single-person business or have several employees, but with only one owner who accepts all risk and liability.
• A sole proprietorship cannot be passed on to a new owner as the same business entity, due to its definition as a single, specific individual-owned business.
• If a sole proprietorship is sold, it must be operated by the new owner as a different sole proprietorship or as a different type of business entity through a sale of assets.

Self-Employment

• A taxpayer does not have to conduct full-time business activities to be considered self-employed.
• Operating a part-time business in addition to having a regular job or business may also be self-employment and constitute a sole proprietorship.
• An activity qualifies as a business if its primary purpose is for profit, and if the taxpayer is involved in the activity with continuity and regularity.