Forms of Sole Proprietorship
A sole proprietorship is the simplest type of business. As such, it is a common way that many individuals start their own business. However, a sole proprietorship is a risky venture, as there are no limits to personal liability. In a sole proprietorship, there is no legal separation between business activities and the life and finances of the business owner. There are many forms of sole proprietorship.
Basic Sole Proprietorship
The simplest and most basic form of a sole proprietorship usually requires little to no formalities. Without the official formation of a separate and new entity, such as a corporation, the legal name of your business is the same as your own name, since essentially you are the entire business. The products or services you sell to the public affect your own personal income and taxes. This is the easiest way to start and operate a business. When people pay the business, they pay you directly.
Doing Business As
A "doing business as" (DBA) business is a form of sole proprietorship. While the legal ramifications of a DBA are the same as a sole proprietorship, the business may interact with the public under a name other than the owner's. This gives the business a more formal appearance, though there is no actual separation between the business and the owner. In many cases, a DBA requires an extra step to establish the operational name of the business. Depending on the state, you have to register the DBA name with the secretary of state, the county clerk or another official office. Some states, such as South Carolina, do not require any registration to operate under a new name, as of July 2010. You can usually open bank accounts under the name of the DBA so the business can accept checks written to the business name rather than the name of the owner. This is a common form of sole proprietorship.
Forms of Sole Proprietorship
A sole proprietorship is a type of business structure that applies to many types of businesses. A musical band, for example, may receive payment for entertainment services from an establishment. The band may operate as a sole proprietorship under one of the band member's names. A baby sitter may receive payment for services, made payable directly to her name in cash or check. This is also a form of sole proprietorship. Arts and crafts manufacturers, such as jewelry makers or pottery artists, may sell their products to the public under their own name or that of a DBA. These are other forms of a sole proprietorship.
James Highland started writing professionally in 1998. He has written for the New York Institute of Finance and Chron.com. He has an extensive background in financial investing and has taught computer programming courses for two New York companies. He has a Bachelor of Arts in film production from Indiana University.