Sole Proprietorship

A business structure in which an individual and his/her company are considered a single entity for tax and liability purposes.

Sole Proprietorship is a company which is not registered with the state as a limited liability company or corporation.

The owner does not pay income tax separately for the company., but he/she reports business income or losses on his/her individual income tax return.

The owner is inseparable from the sole proprietorship, so he/she is liable for any business debts.

See the following example:

Exercise 1