Business Owner's Manual

Sole Proprietorship

This is the simplest form of business structure for a business owned by one person. It offers absolute authority to the owner. On the other hand, there's no one else to share the responsibilities and the potential liabilities with you.

Advantages:

• Easiest type of business to start and the least expensive to establish.

• Most flexible form of business because sole proprietor has absolute authority.

• No need to file a separate business tax return — business losses and gains are combined with personal tax items, and losses and business expenses are deductible, but all business expenses must be tracked and substantiated.

Disadvantages:

• Owner assumes unlimited personal liability for debts and lawsuits.

• Owner's death or illness can endanger the stability of the business.

• The ability to raise capital is limited.

If you are not operating the business under your own name, you must file a notarized "Certificate of Conducting Business under an Assumed Name" Form X 201 at the County Clerk's office in the borough where your business is located. You can purchase the necessary forms at a commercial business stationery store such as Airline Stationery in Midtown Manhattan.

You will need 3 original forms: one for the county clerk, one for the bank where you will set up an account, and one to post at your place of business. As a sole proprietor, you cannot use words or abbreviations in your name that indicate a corporation (such as: limited, ltd., corporation, corp.) or words that indicate more than one owner (such as: associates, group, partners).

For more information about business formation in New York visit the NY City Business Solutions website.