A sole proprietorship is owned and operated by one person. The owner is responsible for the employer s portion of payroll taxes for his employees and pays self employment tax on his income. The sole proprietor is personally liable for all actions or failures to act by the company or its employees. Capital for a sole proprietorship is provided entirely by the owner. He may either use his own money or personally borrow money.
Retirement plans are limited.
The most common are IRA s, SEP s and Keogh plans. A simple partnership is an organization of two or more individuals who share equally in the profits and losses of the business. Each partner is personally liable for everything done by any partner, the partnership or its employees. Partnership agreements should always be drafted by an attorney. However, there is no legal requirement that a partnership agreement even be in writing.