Business Registration (Sole Proprietorships)
Business Registrations (also called sole proprietorships) are the simplest form of operating a business. A sole proprietorship is an unincorporated business that is owned by one individual. The business has no existence apart from the owner. Only one owner is responsible for making all of the business decisions and, therefore, earns all the profits, but also assumes all of the risks and obligations. The owner includes the income and expenses of the business on his or her personal tax return.
Most sole proprietorships tend to be small and localized. The advantages commonly associated with carrying on a sole proprietorship are the following: (1) ease in which to start and dissolve the business (through a simple business registration); and (2) modest start up expenses (see below for business registration fees).
There is, however, a significant disadvantage which may lead you to decide against choosing this business form, namely, unlimited liability. The owner is personally responsible for all of the debts and
obligations incurred by the business. The owner is thus liable to the full extent of his/her personal assets for all of the liabilities and losses which are incurred by the business. Also, the owner is liable for the actions of employees in the course of their employment.
Most jurisdictions require that sole proprietorships register with the relevant government department or authority under the trade name it is operating under. This is sometimes referred to as a “Business Registration”, “Business Name Registration” or “Doing business as (DBA)”. Of course, you do have to get the same business licenses and permits as any other company that goes into the same business.
Moreover, when you register your business with the government’s registration division, you still have to register with the tax department. You may be required to apply for GST and PST and payroll tax numbers (if you have employees) and Import/Export tax numbers.
To learn about other business organizations like incorporations or partnerships click here.
Category: Personal Finance