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Sole Proprietorship Laws

What is Sole Proprietorship?

Sole Proprietorship is also known as sole trader or just proprietorship. Sole Proprietorship is a type of business that is owned and operated by one person and where there is no legal difference between the owner and the business. In a Sole Proprietorship the owner will receive all profits and will have unlimited responsibility for all the losses and the debts to the business. The sole proprietor owns all the businesses assets and all the debts of the business. What this means is that the owner has no less liability than if the owner were acting as an individual instead of a business. Knowing if your business is a Sole Proprietorship or a LLC can be quite confusing.

Read below where Experts have answered questions pertaining to the Sole Proprietorship and all the many of legal implications it can have.

How can someone set up a Sole Proprietorship business?

A Sole Proprietorship only involves the owner. Any income that the owner receives will need to be reported under the social security number for tax reasons. There is no special procedure that needs to be followed in order to open a Sole Proprietorship business.

If someone is starting a Sole Proprietorship for an online business what are the basics in order for the business to be legal?

For online businesses there is not much to do in order for it to be legal. Many people often run the business without registering anything and do that for many years and claim their income on their income taxes. A Sole Proprietorship is an unregistered business so for an online business there is little to none procedure required. If this person is wanting to for a Limited Liability Corporation which is often very simple to form online with a secretary of state’s office and there the person can get the tax ID from the IRS website for the LLC and then this person can operate the site under the LLC.

What is the best way for someone to turn their Sole Proprietorship into a single member LLC?

The best thing for them to do is set with a business attorney and try to set up the business properly as an LLC and get all of the appropriate paperwork submitted and have it confirmed a minority owned business. The attorney then will make sure all of the LLC paperwork is submitted, has obtained the tax ID number in the name of the LLC. Once the business has been registered as a LLC, then the owner can continue to complete any and all documentation that is required for the business classification for eligibility for either a loan or grant program.

What can happen to a Sole Proprietorship business if the owner is not approved for a loan in order to pay the ex-spouse have the value of the business?

In this case the ex-spouse can sue and force the sale of the business in order to receive the pay that the court had ordered the other spouse to pay. If the payment is considered either alimony or spousal support, bankruptcy will not help because of the debt of the alimony or spousal support cannot be released. If the ex-spouse does decide to take a judgment against the other spouse, then the ex-spouse can levee execution on any property that the other spouse has in order to pay back the debt.

Setting up a Sole Proprietorship business is quite simple to most people. Although, there are still some that do not quite understand this process and often will need more information or even have many complex questions. These issues and problems can be addressed when you seek the answers from Experts.

Ask a Business Lawyer

Law Pro
Law Pro, Attorney
Category: General
Satisfied Customers: 1779
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
11688690
Type Your Business Law Question Here...
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9 Business Lawyers are Online Now

How JustAnswer Works:

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    Ask follow up questions if you need to.
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    Rate the answer you receive.

Business Lawyers are online & ready to help you now

Law Pro
Attorney
Satisfied Customers: 1767
20 years experience in business law - sole proprietor, partnership, and corporations
Dimitry K., Esq.
Attorney
Satisfied Customers: 1495
Run my own successful business/contract law practice.
MShore Law
Attorney
Satisfied Customers: 1233
Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

Recent Sole Proprietor Questions

  • I appreciate your follow up . And understand the messy of wrongful

    I appreciate your follow up . And understand the messy of wrongful prosecution however only concern I have is what if it is just dismissed neutral but not in my favor then I can't do wrongful prosecution. Or if she is a no show on January 8 for my summons. My point is I see two options .. A. Proceed with the summons against me, show I was not malicious or harmful and equal communications occurred .. But she was quite cruel saying terrible things like I don't deserve life or anyone around me when she was told I had cancer. It's just mean but nothing I would press charges over. I send her a notarized letter notifying her all must cease and diciest or I will file charges . Leading to her 'attack first' I do not believe anything I did was wrongful or without cause . Immature maybe, but not wrongful. I don't think I will be satisfied this disrupted my life if it just ends with court saying no she didn't harass you so move on. I will feel the need to wrongful prosecute her and I do t want to because of the time and negative energy it will bring. My hope was if I can charge her then at least my ego is satisfied that I let her know it can be done and will be .. What is the best outcome if I don't charge her and proceed and what can consequences be if the court decides she and I both had Unwelcomed contact and ends neutral ? Sorry I know it's very immature and your expertise is far above this. But please keep in mind mines isn't and this is not my life or what I am used to dealing with. I run a non for profit organization and have a 5 year old. Not to much drama so this is kind of a big deal to me
  • How do I fill out an S - corp and is this something I can do

    How do I fill out an S - corp and is this something I can do quickly before years end. I need to fill out paperwork to get it filed before end of year. sos.idaho.gov said I can do expedited and have it done within 24 hours so will have to be done Monday.
    Thank you in advance!
  • Can someone have a drivers license in multiple states??

    Can someone have a drivers license in multiple states?? Thank you
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