For that reason there are virtually no requirements that you register your business at a state office. The liabilities of a sole proprietorship will be your personal liabilities. This means that if the business cannot pay its debts, all of your personal assets are subject to the claims of the business's creditors. Each asset in a sole proprietorship is treated separately for tax purposes, rather than as part of one overall ownership interest. Therefore, a sole proprietor who sells his or her entire business as a going concern must calculate gain or loss separately on each asset.
Sole proprietors are liable for self-employment tax.
They cannot defer income tax by having the business retain its profits. Business losses can be used to offset other income of the sole proprietor. All Rights Reserved.