Tax Treatment
- Sole proprietorships have no separate tax status.
- The proprietor and the business are one and the same for tax purposes.
Advantages
- The simplest, most informal type of business organization.
- Low start-up costs.
- Independence of operation.
- Avoids corporate reporting requirements and administrative red tape.
Disadvantages
- Growth is often slowed by financial limitations.
- The proprietor is personally liable for business indebtedness.
- At the death of a sole proprietor, the business ceases to exist, leaving the owner's family without an income source, and employees without jobs.
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