Term
| Sole Proprietorship- Creation |
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Definition
| Decision of invidivual proprietorship |
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Term
| Sole Proprietorship- what might you legally need to file/obtain when a sole proprietor |
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Definition
| May need license (i.e. you are a lawyer and need a license to practice of law) and fictious business name statement |
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Term
| Sole Proprietorship- management and control |
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Definition
| Sole Proprietorship makes all management deicsions |
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Term
| Sole propreitorships- profit and losses |
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Definition
| Sole proprietor retains all profits; may use losses to offset income. |
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Term
| Sole propreitorship- Liabiliy |
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Definition
The Sole proprietor is personally liable for all debts and obligations. The sole proprietor has unlimited personal liability subject to any exemptions that the law in a state allows.
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Term
| What can exemptions in some states include? |
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Definition
| Examptions in some states can include cars, weding/enagement rignts/ family heirlooms |
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Term
| Sole Proprietorship- Terminations |
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Definition
| Upon death of the owner, the sole proprietor closes the business, or the business is transferred. |
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Term
Ownership of a sole proprietorship
How are they created? |
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Definition
| In sole proprietoships, the owner is the business. Anyone who does businsee withou creating a separate business organization has a sole prorpiort ship. |
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Term
| How is taxation carried out in Sole Proprietorships? |
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Definition
| The business is not a separate legal taxable entity. So you shoud income from the business on a tax income form for yourself. |
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Term
| for Sole proprietorships, who is liabile for things done in business? |
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Definition
| The sole properietor is perosnally liabily for anything done in the course of busienss. |
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Term
| What laws govern sole proprietorships? |
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Definition
| Sole proprietorships are governed through state and local laws. |
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Term
| What do some sole proprietors need to get? What is an example of this? |
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Definition
| Sole propreitors will need to follow local and state licensing requirements. So a person selling ice cream on the street would need a license subject to local/state laws. |
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Term
Do sole proprietors need to file anything to start doing business?
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Definition
| No, sole proprietors do not need to file anything to start their business but they may need permits to do certain things. |
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Term
What is a fictitious name? What must be filed with one of these?
When is this the case? |
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Definition
A fictitious name is the name under which a sole proprietor does business when they do business under their own name.
When doing business under a different name, a sole proprieotr will have to file a fictitious business name statement.
Generally, a ficitious business name statement must be filed if the business does not include the sole proprietorships' last nume or implies that there is more than one person ivolved (i.e. usese the terms Associates, brothers, etc.)
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Term
| Why must a sole proprietorship file a fictious business name statement? |
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Definition
| When a sole proprietorship does business under a name that does not include their last name or implie that their is more than one person involved, innocent third parties will not know whom they need to sue, so they are required to file the name so that those third parties know whom they need to sue. |
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Term
| What is another term for a ficitious business name statement? |
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Definition
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Term
Are sole proprietorships easy to form?
Do you need to file anything? |
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Definition
| Yes, they are extremely easy to form. You just have to start doing business. All you need to file is a d/b/a petition/applicaiton if you are not using your surname in the business. |
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Term
| Who makes all the decisions in a sole prorietorship? |
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Definition
| The sole proprietor does. |
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Term
| Who gets all the p rofits and losses of a sole propreitorship? |
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Definition
| the sole proprietor keeps all profits and losses. |
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Term
What is the continuity of a sole proprietorship?
Can the business be trasnferred?
How or how not? |
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Definition
The is no continuity of existence for a proprietorship. Because the business is the person, it cannot be inherited, sold, or transferred.
You could however trasnfer such assets as a copyright, trademark, client list, etc. and be maintained as a consultant. You may also have to sign a non-compete clause with the party to whom your are transferring assests. |
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Term
| In a sole propreitorship, can it be hard to raise capital? |
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Definition
| This can be difficult because with only one person, there is only one credit score for lenders to judge. |
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Term
| What is taxation like for sole propreitors? |
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Definition
| Sole proprietors have to deal with lots of tax forms and becuse they are teh business all taxation happens through them. The sole propreitor will also have to get a tax id number if they need to hire people. |
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Term
| At what tax level are sole proprietor's taxed? |
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Definition
| Sole proprietor's are taxed at the level appropriate to their individual tax bracket? |
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Term
| What happens if a sole proprietor sales/transfers their interest? |
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Definition
| Their interest may be trasnferred but the sole proprietorship cannot. A new sole proprietorship will be created if the orignal owner trasfers their interest to another individual. |
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Term
| Advantages of Sole proprietorships |
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Definition
1) easy to form and maintain
2) Inexpensive to form
3) Owner is sole deicision maker
4) Management is informal and flexible
5) All profits retained by owner
6) Pass-through tax status |
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Term
| Disadvantages of Sole Proprietorship |
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Definition
1) Unlimited personal liability
2) Limited ways of rasising capital
3) Lack of continuity
4) Possible lack of expertise in management. |
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