What is a Sole Owner?

Question

I need to know what a sole owner is and if they get a TAX id from IRS just high level information would be helpfull thank u!!

Sole Owner is not a sole propreitor......what the advantage and disadvantage of Sole Owner

Answer 1

A sole owner is an individual who is the only owner of either a sole proprietorship or an LLC (Limited Liability Company.)

A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest form of business organization to start and maintain. The business has no existence apart from you, the owner. Its liabilities are your personal liabilities and you undertake the risks of the business for all assets owned, whether or not used in the business. You include the income and expenses of the business on your own tax return. For more information on sole proprietorships, see Publication 334, Tax
Guide for Small Businesses.

An LLC is a special business entity formed under the rules of each state. For tax purposes a sole owner of an LLC may either treat the entity as a corporation or as a "Disreagrded entity." If the LLC is a "disregarded entity" then its income and expenses are treated the same as a sole proprietorship and handled on the owners personal tax return.

A sole proprietor does not need to file a SS-4, Application for Employer Identification Number unless the company will be paying employees, paying excise taxes, or filing pension plan reports. (An employer identification number - EIN - is the same as a taxpayer ID number - also called a TIN.) If a separate EIN is not required then all income/expense reporting is done on the owner's personal tax return under the owner's social security number.

As for the realtive advantages and disadvantages:
Advantage of sole proprietorships:

Complete Control. You have 100% ownership of, control over and responsibility for your business. THe same could be argued for a one shareholder corporation... but certainly not for a partnership.

Simplicity of Operation. Record keeping is streamlined and required legal documentation reduced.

Cost-effectiveness. Sole proprietorships are inexpensive to start-up and maintain.

No Double Taxation. Because the business is not treated as a separate taxable entity, all business income is reported on the owner's individual tax return and is therefore only taxed once. This is also true for a partnership or a Sub-Chapter S Corporation (with some exceptions.)

Disadvantages:

Liability. The owner is personally liable for any obligations of the business. This means creditors and lawsuit claimants can sue you personally, going after not just your business assets, but your other personal property as well. Likewise, personal creditors can also go after your business assets.

You should talk to a tax accountant to discuss the tax advantages/disadvantages of operating as a sole proprietor vrs a corporation. Depending upon the profitability of the business and the corporate form it is possible to reduce overall taxes through careful tax planning in conjunction with managing distributions.

Answer 2

If ONE person owns the entire company, they are the sole owner. ANY individual's tax ID number is their social security number, unless they are not eligible for one. If you have employees, you need an EIN (employer identification number) as well. If your business sells anything subject to sales tax, your state may require a sales tax id number as well.

Answer 3

A sole owner or proprietor is a business that is not incorporated or a partnership. You need a federal tax ID only if you are going to have employees.

Answer 4

Sole owner is really sole proprietor which means you are taxed on your income that you receive from being in business for yourself. You claim the income on Schedule C. The form you need for a take ID is SS-4 or SS-5 , I forget which one it is ,which is on www.irs.gov . You can complete it online.