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.