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Starting a business as a sole proprietor
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You wake up one day and decide to FINALLY realize your dream of owning your own business. Depending on the type of business you are attempting to start, you could begin functioning as a business that same day, before the procrastination and doubt sets in.
The majority of all small businesses are started under the status of Sole Proprietorship, in part because it is the easiest business entity to form. Also, most sole proprietors are not even aware that they are technically operating a business.
You are a Sole Proprietor, if:
You operate as a freelancer; independent contractor; writer; designer; or pretty much any occupation where you are selling a product, providing a service or compensated through commission only.
There are major advantages and disadvantages to operating as a sole proprietor, here are just a few:
Advantages | Disadvantages |
Quick Start up/Low Cost | No separation between business and business owner. |
Taxes are reported with individual income, IRS Form 1040, with Schedule C attached. | Personally liable for business debts or any legal actions. |
Healthcare is deductible | Other fringe benefits are disallowed. Sorry, no 3-Martini lunch allowed. |
As a sole proprietor you are 100% responsible for obtaining all required licenses in order to be in compliance with the state and county laws.
Today, a great number of sole proprietors operate from home and you must apply for a Home Occupancy Permit.
Why is the Home Occupancy Permit required?
Real Estate has zoning ordinances that specify the type of use that is permitted in any given area. There are four designated Zones: Residential; Commercial; Industrial and Agriculture.
When you found that perfect house, in that perfect neighbor that area was zoned for residential use only, the last thing your neighbors want is an increase in both foot and street traffic going to and from your home. Therefore, it is extremely important to limit the activity that interferes with the nature state of the neighbor. In addition, most counties will also impose ordinances regarding the parking of Commercial vehicles in residential areas.
If you must meet clients, I have found Starbucks (after 10 am) to be a perfect meeting location. Or, you could rent an Incubator office space or conference room for a series of hours, days, weeks or long-term use. There are a number of companies providing these services throughout Maryland. Also, you could check your local Business Economic Development Center for use of meeting space at their facilities.
To learn more about operating as a Sole Proprietor, visit my site at www.tsbdg.com.
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