In General: This
is the simplest form of business. A sole proprietorship is not a separate
entity itself. Rather, a sole proprietor directly owns the business and
is directly responsible for its debts.
Liability for Loss: In a sole proprietorship, the owner is personally liable
for the company, thus placing his or her entire personal assets and wealth
at risk. If an owner is married, that owner puts the community property
at risk as well.
Control: The owner (sole proprietor) has total management and control over
the company. However, the price for total management and control is that
the owner is at risk for personal liability incurred through the acts of
the owner’s agents or employees.
With the exception of complying with any applicable licensing requirements,
there are no formalities required of a sole proprietorship.
Note, however, where the business is conducted under a name which does
not show the owner’s surname or implies the existence of additional owners,
California, for example, requires that the owner file a fictitious business
name statement and publish notice.
The owner can sell the business as he or she pleases.
Duration: The sole
proprietorship remains in existence for as long as the owner is willing
or able to stay in business.
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