Series 66: Sole Proprietorship

Sole Proprietorship

The most basic form of business organization is when individuals go into business for themselves and do not set up another separate entity for their business. A basic example of this would be the handyman who goes into business for himself, is paid directly by the customer, and deposits the money he earns right into his own bank account. He is considered a sole proprietor, meaning that he is the sole owner of his business. Even if he adds employees that work under him, he is still the sole proprietor of the business.

In the event he wants people to identify his business by a name different than his own, he can do so without ceasing to be a sole proprietor. He simply files a doing business as (DBA) notification with his city or county, calls himself or his business whatever he wants, and opens up a separate bank account. He is still considered a sole proprietor who is simply doing business as someone or something else.

The biggest advantage to setting up a business as a sole proprietorship is the lack of administrative hoops an individual would need to jump through to begin operating. Aside from meeting local regulations like obtaining a business license and abiding by professional codes, there is virtually nothing else required. This is a huge plus at tax tim