Presentation by Mike Cooley

I. SOLE PROPRIETORSHIPS

A sole proprietorship is not an "entity," and has no existence apart from its owner. A sole proprietorship consists of only "one" individual (ownership by more than one person creates a partnership). This is the simplest and most common form and method of starting a new business. NOTE: A husband and wife can be treated as "one person," and thus classified as a sole proprietorship.

Major Benefits of Sole Proprietorships

• The relative cost to start a sole proprietorship is inexpensive.
• The owner of the sole proprietorship controls all facets of the business.
• The business and the owner are one. There is no separate legal entity and thus no
separate legal person.
• There is no “franchise fee” payable to the Franchise Tax Board.

Major Drawbacks of Sole Proprietorships

• The life of the business continues to exist as long as the business owner is alive. Once the owner dies, the sole proprietorship no longer exits.
• The sole proprietor is personally liable for all debts and actions of the company.
• All profits are treated as compensation, and thus subject to payroll taxes.
• If you want to sell or transfer the business, there is no business entity to sell ... only assets.

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