{"id":1403,"date":"2010-02-22T11:40:59","date_gmt":"2010-02-22T18:40:59","guid":{"rendered":"http:\/\/www.financenewmexico.org\/articles\/?p=1403"},"modified":"2013-07-02T12:32:00","modified_gmt":"2013-07-02T18:32:00","slug":"sole-proprietorship-makes-sense-for-startups","status":"publish","type":"post","link":"https:\/\/financenewmexico.org\/sandbox\/articles\/starting-or-growing-a-business\/sole-proprietorship-makes-sense-for-startups\/","title":{"rendered":"Sole Proprietorship Makes Sense for Startups"},"content":{"rendered":"
\"Candice

Candice Lee of Sommer, Udall, Hardwick & Hyatt, P.A.<\/p><\/div>\n

One of the first considerations for the owner of a new business is what form that business should take. The most common options are sole proprietorship, partnership (general and limited), corporation (C corporation and S corporation) and limited liability company.<\/p>\n

Most businesses begin as a sole proprietorship, which makes sense for the startup and new business owner.\u00a0Many sole proprietorships consist of a single individual working at home, developing a product in the garage or writing software code on the home computer.\u00a0These businesses have few assets other than the equipment and tools used \u2014 and usually owned \u2014 by the individual.\u00a0Any assets acquired by the sole proprietor are purchased in the owner\u2019s name, although some sole proprietors use a \u201cdoing business as\u201d or \u201cd\/b\/a\u201d name following their own names.<\/p>\n

In a sole proprietorship, the business does not exist apart from its owner.\u00a0All of the profits, losses and deductions for the business are reported on the owner\u2019s personal tax return, and the owner of the business is personally liable for all of the business\u2019s debts, obligations and liabilities, regardless of whether the owner is using a trade name as a \u201cd.b.a.\u201d\u00a0No regulatory filings are required to establish or create a sole proprietorship, but entrepreneurs should check with local and state tax authorities to ensure the business is in compliance with local and state tax laws.<\/p>\n

For most business owners and entrepreneurs, the sole proprietorship will only suit the business and its goals for a limited time.\u00a0At some point, the business will expand and the owner will be looking for ways to limit his or her personal liability, bring in new partners and seek outside investment.\u00a0At this point, the business owner needs to consider how \u2014 and in what form \u2014 to move forward. These are the kinds of questions legal counsel will ask a business owner who is trying to decide whether to become a partnership, corporation or LLC:<\/p>\n