Sole proprietorships are established typically by an individual or couple. In most cases, it is operated under the name of the individual in control of its operations or a name assigned by the owner. There is not a separation between the individual or the business. He or she is responsible directly for all debts incurred under the business name. A Business Lawyer Camp Hill can further explain the legalities of establishing this business type. Visit website for more information.
Conducting Operations of a Sole Proprietorship
The business owner will submit payments for equipment and products utilized by the business through his or her own name. All properties owned by this individual or the company are not separated through the law. At any time that the owner is sued by a customer for injuries or breach of contract, personal properties such as their home or automobiles are not excluded from the lawsuit.
Filing Taxes for the Company
When filing taxes, the business owner is required to complete a Schedule C which shows all profits and losses related to the business. This includes all incoming earnings, whether paid in cash or if the customer provides a 1099 for these payments. In most cases, these earnings are listed as miscellaneous income unless covered under a different category based on the services rendered. They establish the value of the tax implications based on the calculations reached on Schedule SE. At any time, that unemployment taxes are required by state law, the owner is required to pay these requirements.
The Pros and Cons
The business is established quickly without extensive formalities. The owner may keep all assets and properties together as it is their personal income generated by the business. The fees to start the business are minimal.
Unfortunately, a sole proprietor is subject to all liabilities imposed on the company. They cannot offer an interest into the company to shareholders to generate capital. It is less likely that the owner can maintain value of the company after their death, unless they have another family member involved and generating profits before they pass. To discuss these concepts with a Business Lawyer Camp Hill, potential owners may contact Serratelli Schiffman & Brown P.C.