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Sole Proprietorship

Business activity today is the primary source of economic development all over the globe. In fact every activity that originates some transaction, or involves exchange of resources, one way or the other, is a business. With the translation of local traits into global standardization, the writers have divided the business activity into four major structures: Sole Proprietor, Partnership, Corporation and Limited Liability Companies.

Most business publications agree upon the structure ‘Sole Proprietor’ being represented as a single person holding the ownership stakes of the business and is personally responsible for the activities performed by the business. As the word sole suggests, it puts all the accountability, all the liability and all the earnings in the hands of the proprietor. Like always, this structure also has both its pedals, one up, one down, but importantly all are subjected to the nature and scale of the business.

The owner enjoys complete control over operations and financials, works with his personal stake, and is solely responsible for whatever actions he take. Moreover, he’s only entitled to pay his income tax, and technically both the business and owner are taxed once and together. On the other hand, sole proprietors have no opportunity to raise capital by selling the shares, and the liability of business is the liability of owner i.e. the liabilities of business must be satisfied by assets of owner, if the need comes.

Moreover, sole proprietors are also entitled for taxation of Medicare and Social Security, depending upon their income. The ultimate business structure is completely dependent upon the particular nature and scope of the business and the resources/needs of the investor; the investor needs to weigh upon what he wants and what he doesn’t.


Entrepreneurs (2007) The Basics of Sole Proprietorship. Accessed on March 25th, 2010 from http://www.entrepreneur.com/startingabusiness/startupbasics/businessstructure/article77798.html

IOWA Secretary of State, Michael A. Mauro (2000). Sole Proprietorship. Accessed on March 25th, 2010 from http://www.sos.state.ia.us/business/sole.html

Tanned Feet, (2004). The Entrepreneurs help page, Sole Proprietor. Accessed on March 25th, 2010 from http://www.tannedfeet.com/sole_proprietorship.htm

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