The simplest and most typical type of business structure is a sole proprietorship. A business that is owned and run by just one person is known as a sole proprietorship. A sole proprietorship can be easily and inexpensively registered in Tennessee. In Tennessee, forming a sole proprietorship costs $20. The Tennessee Secretary of State will receive payment for this fee. Legal Preconditions for a Sole Proprietorship
Unlike its owner, a sole proprietorship is not a distinct legal entity. Therefore, compared to other business models, the legal requirements for a single proprietorship are less complicated. A sole proprietorship is not required by law to file an annual report or hold annual meetings. However, in order to conduct business in Tennessee, a sole proprietorship must secure all appropriate business licenses and permits. Taxes for a Sole Proprietorship to File
You must include all business earnings and costs on your personal tax return if you are a solo proprietor. Self-employment tax, which includes Social Security and Medicare taxes, is another obligation. The current self-employment tax rate is 15.3% of your net self-employment income. To prevent underpayment penalties, you might also need to make projected tax payments throughout the year.
A limited liability company (LLC) with just one owner is known as a single-member LLC. An LLC with only one member, however, can add more members. An change to the LLC operating agreement must be filed with the Tennessee Secretary of State in order to do this. The new member’s name, contact information, and the conditions of their membership should all be included in the amendment. Which is better: a one-member LLC or a partnership? Your particular business demands will determine whether you should form an LLC with a single member or a partnership. A single-member LLC offers the owner limited liability protection while continuing to support pass-through taxation. Contrarily, a partnership enables numerous owners to split the company’s gains and losses. However, each partner is personally responsible for the partnership’s debts and obligations. To choose the best business structure for you, it’s crucial to speak with a legal and tax expert.
In conclusion, it is cheap and simple to register a single proprietorship in Tennessee. In comparison to other business models, a sole proprietorship has less legal requirements. The self-employment tax and all business revenue and expenses must be reported on your personal tax return if you are a sole proprietor. An amendment to the LLC operating agreement must be filed in order to add members to a single-member LLC. Your particular business demands will determine whether you should form an LLC with a single member or a partnership.