Sole proprietorship
Sole Proprietorship (pronunciation: /soʊl ˌprəʊprɪˈɛtərʃɪp/) is a type of business entity that is owned and run by one individual and where there is no legal distinction between the owner and the business.
Etymology
The term "sole proprietorship" comes from the words "sole" meaning "only" and "proprietorship" which means "ownership". It refers to a business that is owned and controlled by a single individual.
Definition
A sole proprietorship is a type of business entity that is owned and run by one person. There is no legal distinction between the owner and the business, meaning the owner is entitled to all profits and is responsible for all the business's debts, losses, and liabilities.
Characteristics
Sole proprietorships have several key characteristics:
- Simplicity: Starting a sole proprietorship is generally less complicated and less expensive than starting a corporation or a limited liability company.
- Liability: The owner of a sole proprietorship is personally liable for all debts and obligations of the business.
- Taxation: In a sole proprietorship, the business does not pay taxes separately from the owner. The owner reports business income or losses on their personal income tax return.
Related Terms
- Partnership: A business owned by two or more people who share its profits and losses.
- Corporation: A company or group of people authorized to act as a single entity and recognized as such in law.
- Limited Liability Company: A corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities.
See Also
External links
- Medical encyclopedia article on Sole proprietorship
- Wikipedia's article - Sole proprietorship
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