A sole proprietorship is usually the easiest legal structure to use for setting up a company. It can be as simple as deciding you’re in business. Congrats, you’ve established a sole proprietorship! In this case, the ‘company name’ would be the same as yours.
A sole proprietorship is a business owned and operated by a single individual, and it is the simplest and most common form of business structure. Setting up a typical sole proprietorship involves just a few steps:
- Choosing a business name and filing with the state to register your business. You don’t need to pay anyone to do this, states make it as easy as possible because they want entrepreneurs to start new companies there!
- Obtaining any necessary licenses or permits. This varies depending on what you’re doing and your state. Even if you’re only selling baked goods at a flea market, some states want you to register so they can make sure you’re doing it in a sanitary kitchen.
- Setting up a business bank account. Yes, a business bank account is important even for a sole proprietorship! You want to keep your personal and business money separate as much as possible to make bookkeeping and taxes as easy as possible. Having a business bank account makes it easier to apply for a loan in the future if you ever want to expand.
One of the main advantages of a sole proprietorship is that it is easy to set up and manage, with minimal paperwork and regulatory requirements. Another advantage is that the owner of a sole proprietorship has complete control over the business and its profits.
However, it’s important to note that a sole proprietorship also has some disadvantages. Sole proprietorships have unlimited liability for the debts and obligations of the business. This means that the owner of a sole proprietorship is personally responsible for any debts or legal judgments against the business. If there’s any chance of going into debt with the business or getting sued, it may be a better idea to use a different legal structure for your company.
Real Accounting Solutions LLC
Real Accounting Solutions, LLC is an Equal Opportunity Employer. Employment selection and related decisions are made without regard to sex, race, age, disability, religion, national origin, color, or any other protected class.
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