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  1. 1.  A sole proprietorship is a business established, owned, and controlled by a single person.  Sole proprietorships come in all shapes and sizes.  The owner realizes all the profits and assumes responsibility for all losses.
  2. 2.  Of the four forms of ownership, the proprietorship is by far the easiest to form. sole  The government exercises very little control over the establishment of new sole proprietorships.  Start-up can be immediate and simple.  You may need to obtain licenses or permits for your particular type of business.
  3. 3.  Sole proprietorships are simple to start. No formal action is required.  A sole proprietorship may be started immediately.  The owner has total control of all aspects of the business.  The owner receives all the profits.  The business itself pays no income tax; the owner pays income tax as an individual.
  4. 4.  The owner has unlimited responsibility for losses, debts, and other liabilities the business might develop.  The owner must make all the decisions.  The owner is the only person who can arrange financing or capitalization.  The existence of the business ends upon the owner’s death.
  5. 5.  Sole proprietors make all the decisions regarding the operation of the business.  The assets of sole proprietors are not considered legally separate from the assets of the business.  Owners of sole proprietorships report business income and expenses on their personal income tax returns.
  6. 6. Partial list of tax forms  Form 1040: Individual Income Tax Return  Schedule C: Profit or Loss from Business (or Schedule C-EZ)  Schedule SE: Self-Employment Tax  Form 1040-ES: Estimated Tax for Individuals  Form 4562: Depreciation and Amortization  Form 8829: Expenses for Business Use of Your Home  Employment Tax Forms