What is a Sole Proprietorship?
Naming the business
The business can simply be named after the owner, or can use a fictitious name (trade name). If the business were to be named after a trade name, the owner must file an assumed or fictitious name certificate by a local or state public office. This is so that people will know the real name of the owner if needed to be contact by any means. Lastly, they must have a business licence to do business under state laws or local ordinance.
In the state of Illinois, all businesses must register their business with the Illinois department of revenue for taxation purposes and the Illinois department of employment security for paying unemployment taxes for their workers and also carry worker's compensation insurance.
- very easy to start up
- can start up a business within days
- is in-expensive to create a sole prop. business
- very few rules and regulations for the government
- can freely mix personal and business assets
- all the profits goes to the owner
- doesn't need to pay tax employment on him/herself, but have to pay unemployment tax on employees.
- owner is personally 100% responsible for all the dept that may occur in the business. If owner doesn't have enough money, he/she needs to sell their personal assets to pay off all liabilities of the business
- Its harder for a sole proprietorship to get big loans from creditors because they feel its to risky that they are not likely to pay them back so creditors put high interest on the loans.
- It's very unlikely that this type of business survives their dept, if dept may occur
- difficult to attract talented/qualified employees.