A business entity owned and managed by one individual. The owner, called a sole proprietor, does not pay separate income tax on the company, but reports all losses and profits on his/her individual tax return. Because the owner is indistinguishable from the business, he/she remains personally liable for all debts of the business.
Definition from Nolo’s Plain-English Law Dictionary
A business owned by an individual that has not been registered as a limited liability company, a corporation, or any other type of legal tax entity. For IRS purposes, the owner (sole proprietor) and the business are one tax entity, meaning that business profits are reported and taxed on the owner's personal tax return. The main downside of a sole proprietorship is that its owner is personally liable for all business debts.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:24 pm