
A sole proprietorship is a business owned and operated by one person. The law views a sole proprietorship as an extension of the owner rather than a separate business entity. Additional factors to evaluate when considering a sole proprietorship include:
- Legal Formalities: In Iowa there is no sole proprietorship statute. Instead, Iowa law requires individuals conducting business under a name other than the “true surname” of the business owner make a filing at the county level.
- Taxes: A sole proprietor reports income, gains, deductions, and losses from the business on his or her personal tax return.
- Financing: A sole proprietorship’s financial resources are no greater than those of the owner and of the credit sources available to the owner.
- Liability: A sole proprietor is liable for his or her own acts and for the acts and obligations incurred by his or her agents.
- Authority: The sole proprietor has total management authority. He or she may borrow funds, hire services, and rent real estate or equipment from others. However, he or she becomes personally liable to pay these individuals.
The attorneys at Simpson, Jensen, Abels, Fischer & Bouslog, P.C. are experienced in handling business formation issues. Contact us at (515) 288-5000 to discuss which entity choice is best for you.
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