Question

Assume you are starting your own business as a sole proprietorship. What are some of the legal requirements you would be interested in researching? Obviously, there are many areas of interest to a business person including personnel, taxation, insurance, liability, and filing requirements.

Answer 1

Explanation:

Taxation:

Sole proprietor has the owner responsible for doing business and for profit and loss so the income tax is filed under the name of owner and does not have to file separate tax in the name of firm.

Liabilities:

Sole proprietorship is more like personal business in the name of firm, since the debt liability and if business go bankrupt owner is personally liable for paying that debt.

Filing:

Since the income tax is filed in the name owner filing would not need separate requirement and personal document of owner would be enough to do the filing for the firm. IRS form 1040 will needed because it is filled as individual filing and sole proprietors are filing tax under it so this will be requirement for it.

Insurance:

In sole proprietorship you do not need to obtain liability insurance since its not separate from owner.

Personnel:

Sole proprietor can hire any number of employees for its firm and there is no limit for it, owner merely responsible for the filing taxes for these employees.