In terms of sheer numbers, sole proprietorships are the most popular form of business. Owned and operated by a single owner (the proprietor), these businesses are chiefly found in the service sector or in retail and wholesale trade. Simple to form, small, independently-owned businesses are different from big businesses for several reasons.
For example...
Characteristics
The sole proprietor is the only person with an ownership interest or personal liability in the business.
- There is no difference between the owner's personal and business assets.
- All business assets and profits are owned directly by the individual.
- Sole proprietors are individually liable for the debts of the business to the full extent of their personal assets.
- Sole proprietors are not considered employees of the business for federal income tax purposes. Thus, while they can set up employee benefits such as group life, health and disability insurance for their employees, proprietors generally may not deduct the cost of providing their own coverage under these plans, except for health insurance.
- A deceased proprietor's business must be closed promptly by the executor or administrator.
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