A sole proprietorship is a business that legally has no separate existence from its owner. Income and losses are taxed on the individual’s personal income tax return. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. A sole trader receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. It is a “sole” proprietorship in contrast with partnerships (which have at least two owners). A sole proprietor may use a trade name or business name other than their or its legal name. They may have to legally trademark their business name if it differs from their own legal name. The process varies depending upon the country of residence.
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