Читать книгу Reading Financial Reports For Dummies - Lita Epstein - Страница 32

The simplest business structure is the sole proprietorship — the IRS's automatic classification for any business that an individual starts. Most new businesses with only one owner start out as sole proprietorships. Some never grow into anything larger. Others start adding partners and staff and may realize that incorporating is a wise decision for legal purposes. (Check out “Seeking Protection with Limited Liability Companies” and “Shielding Your Assets: S and C Corporations,” later in the chapter, to find out more about incorporating.)

To start a business as a sole proprietor, you don't have to do anything official, like file government papers or register with the IRS. In fact, unless you formally incorporate — follow a process that makes the business a separate legal entity — the IRS considers the business a sole proprietorship. (I talk more about incorporation and the process of forming corporations in the upcoming section, “Shielding Your Assets: S and C Corporations.”)

The fact that the business isn't a separate legal entity is the biggest risk of a sole proprietorship. All debts or claims against the business are filed against the sole proprietor's personal property. If a sole proprietor is sued, insurance is the only form of protection against losing everything.