You are required to include the income and expenses of the business on your own Federal income tax return. It needs little or no governmental approval and is less expensive than a partnership or corporation. There are no Tennessee state taxes but there are county and city licenses and taxes. This liability extends to all the proprietor s assets, such as a house and car. Certain business liabilities may be lessened by obtaining proper insurance coverage.
Capital is dependent on the individual s assets and credit.
Long-term financing may be relatively difficult to obtain. The Partnership A partnership is a legal entity existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. A partnership is not generally taxable at the entity level from a Federal income tax viewpoint and each partner includes his or her share of the income or loss on his or her Federal income tax return. General partners share unlimited personal liability for all entity debts and obligations and each is usually responsible for the acts of the other.