A sole proprietor is a single individual who owns and operates the business. A business conducted by a sole proprietor has no legal separation between the individual and the business. No legal formalities are required to bring this form of business structure into being, and there are no particular formalities necessary for operation. As sole owner of the assets, the sole proprietor is entitled to all of the profits of the business but is personally responsible for all of its liabilities and obligations as well. There is no shield from liability other than insurance coverage.
A sole proprietor who wishes to conduct business under a name other than the real name of the person may elect to file a Registration of Firm Name with the county Register of Deeds according to the instructions. A sole proprietor can also elect to file a trade name with the Secretary of State.
When starting a business it is important to make an informed decision on your business structure. Your choice or action can affect your personal liability and tax obligations. You are encouraged to seek additional information and/or obtain the assistance of a qualified accountant or attorney before finalizing your choice of legal entity.
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