FAQS About Sole Proprietorships
A sole proprietorship is a business with one owner, the sole proprietor, that is not organized or formed as a legal entity under any state or federal law. There are some special exceptions where a husband and wife may be file to be considered joint owners in a sole proprietorship.
What are the liabilities of sole proprietors?
The sole proprietor is personally liable for financial debts of the business and any claims brought against the business to the full extent of his personal assets.
How are they taxed?
The IRS sees the sole proprietor and the business as the same for income tax purposes. The sole proprietor pays income taxes on the profits of the business as though it were personal individual income.