The form of business entity known as a sole proprietorship is one that can be owned in Tennessee by either a single person or a married couple. This indicates that all business operations and liabilities are completely the owner’s responsibility. A sole proprietorship does not require any official paperwork to be filed or startup costs to be paid, unlike other entities like partnerships and corporations.
However, you must register a “doing business as” (DBA) name with the Tennessee Secretary of State if you intend to run a sole proprietorship under a name other than your own. By doing this, you’ll be able to utilize a business name that’s distinct from your given name. In order to run your business, you must also secure any licenses and permits needed from the state or local government. Negative aspects of a sole proprietorship
The fact that a sole proprietorship’s owner is individually responsible for all of the company’s debts and responsibilities is one of its key drawbacks. This indicates that the owner’s personal assets may be at danger if the company is sued. Additionally, several tax breaks and deductions that apply to other kinds of entities but not sole proprietors are not available to them.
A sole proprietorship could be the best choice for some firms despite its drawbacks. For instance, establishing and maintaining a sole proprietorship is comparatively simple and affordable. The owner also has total control over the company and has the freedom to act without waiting for input from shareholders or partners. Is a Single-Member LLC the Same as a Sole Proprietorship?
A single-member LLC and a sole proprietorship are not the same thing. A single-member LLC provides the owner with minimal liability protection even though both entities are owned by the same person. As a result, the owner’s private assets are typically shielded from the debts and obligations of the company. Additionally, a single-member LLC might be able to provide tax advantages that a sole proprietorship cannot.
In conclusion, if you’re thinking about starting a firm in Tennessee, it’s critical to comprehend the fundamentals of a sole proprietorship. Despite having both benefits and drawbacks, this kind of corporation might be the ideal choice for your company depending on your particular requirements and objectives. To choose the ideal structure for your company, you must speak with an accountant or attorney.