Business Formations Information Center

Do you know what kind of entity will best fit your new business? From limited liability companies to Sub-chapter S corporations, there are a number of different options, all with distinct advantages. While some business entities have more beneficial tax structures, others can help you limit your liability. We will help you find the one that works best for your business. Contact us today for more information.

Sole Proprietorships

Is your business about to take part in a real estate transaction? From purchases and sales to lease agreements, we can help. At the law offices of Henderson & Harris, LLC, we have handled thousands of real estate transactions. We can help you explore your options and make sure you are getting everything you expect out of your real estate contract. Contact us today for more information.

A sole proprietorship is an unincorporated business owned by one person. It is a popular business structure because it is simple, easy to form and operate and subject to few rules and regulations. Unlike limited liability companies (LLC) and corporations, no paperwork must be filed with the government in order to create a sole proprietorship. In a sole proprietorship, the owner has complete control over the management of the business and retains all profits of the business. If you are planning on opening a business and are considering a sole proprietorship, talk to an attorney at Henderson & Harris, LLC in Richmond Hill, Georgia who can advise you of the advantages and disadvantages of this type of structure.

While the sole proprietor has total control over the business, he or she can hire employees and enter into agreements with landlords or lenders. A sole proprietorship can be operated, in some circumstances, by a husband and wife combination. The line between a sole proprietorship and a partnership tends to merge in those situations, though. It is important to involve an attorney in such situations to identify any potential problems that could arise from a family business scenario.

Sole proprietorships are often operated in the name of the owner. If the owner's name is not used, then the owner may be required to file a "fictitious name" certificate with the appropriate state authority. Many states also do not allow businesses to use the terms "Inc.," "Co." or other incorporated terms of art unless the business is, in fact, incorporated.

A sole proprietorship ends upon the death or withdrawal of the proprietor or if the proprietor sells the business's assets to another party. When sole proprietorships begin to grow, they can incorporate or convert the business to an LLC. This is mostly to avoid personal liability and to take advantage of the various tax breaks that the government provides.

In a sole proprietorship, the business and the owner are legally inseparable, meaning that the owner reports the income or losses of the business on his or her personal tax returns. More importantly, this also means that the owner is personally liable to any potential creditors of the business. Likewise, creditors can seize assets of the business to satisfy any claims that they may have against the owner personally. A sole proprietorship does not afford the owner the same protections from liability that a LLC and corporation can provide.

The advantages of a sole proprietorship include:

Ease of formation and operation
Can deduct business losses on personal tax returns
Has no double taxation like some other business structures
Owner has total control of the business

The main disadvantages of a sole proprietorship include:

Unlimited personal liability
Can only have one owner
Upon the death of the owner, the business legally ceases to exist

Conclusion

Sole proprietorships are a popular means of conducting business, but they are not without risks. If you are considering opening a business, an attorney at Henderson & Harris, LLC in Richmond Hill, Georgia can help make sure that you are on the right track.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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