Setting Up a Sole Proprietorship in Utah
A sole proprietorship is a business owned, operated and managed by a single individual. When an individual forms a sole proprietorship in Utah, that person runs the risk of having all of his/her personal assets exposed to creditors in business. For example, if an employee accidentally or carelessly injures a customer or some other person, the owner of the business is liable for the injury. Even if there is public liability insurance coverage, under sole proprietorships, the possibility always exists that the liability may exceed the coverage of the insurance policy - particularly in a society such as ours where multi-million dollar judgments are becoming more and more common.
All profits and debts belong to the owner under sole proprietorship, and are to be reported on the owner's personal tax returns. Also as a sole proprietorship the owner is required to pay self-employment tax at the rate of approximately 15% in addition to the required federal and state taxes.
Although this form of business entity has many drawbacks it is the easiest to operate, the easiest to set up and the least expensive to form.
Understanding the Difference Between Sole Proprietorship Vs. LLC
For more information on sole proprietorship vs. LLC, call us at 801.467.1900 or start a sole proprietorship in Utah today. If you're interested in becoming a contractor in Utah, get your Utah contractor's license now!