| The Criteria That Determine Sole Proprietorships | Not all corporations started as a corporate entity. Many businesses start out small with one owner. They are known as sole proprietorships, the simplest and most widespread form of business formation in the United States. Certain criteria are used to determine sole proprietorship status. A sole proprietorship: * is owned by a single individual
When you are planning to do business with a sole proprietorship, bear in mind that since a single individual owns a sole proprietorship, one person makes all the decisions and does not have to contend with a legal department to approve contracts. The owner can only use personal funds, although he may have separate savings and checking accounts for the business. Also, it may be difficult for a sole proprietor to obtain loans so money may be tight. If a sole proprietor were to die, the business would probably end. * is not legally differentiated from the owner and is not usually required to register as a business
A sole proprietor is not legally differentiated from the business, regardless of whether the business bears his name or a fictitious name, and does not have to meet many requirements to start a business. Since the business is not considered a legal entity, it is the owner who is sued rather than the business. * must be registered as a business if it operates under a fictitious name
A sole proprietorship operating under a name other than the name of the owner is considered to be operating under a fictitious name. The kinds of services and supplies that might be provided by a sole proprietorship and require licensure include healthcare services, the provision of food and drink, childcare, and financial services. State statutory law, established by the state legislature, governs sole proprietorships, like partnerships, franchises, and corporations. *