This article explores the basics of business entities in Colorado. A sole proprietorship is the simplest business form. An individual engaged in business activity is a sole proprietory. No charter or permission is required from the state in order to start business as a sole proprietor. Income and expenses are reported on schedule C of the proprietor's federal income tax return.
Net income is subject to federal income tax and self employment and medicare taxes.
Trade names are registered with the Colorado Department of Revenue. There is no liability protection. The sole proprietor is personally liable for the obligations of the business a all kinds. No particular formality is required to close a sole proprietorship. The proprietor closes the doors, pays the bills, and keeps the remaining assets.