A Little About
Proprietorships represent the simple ownership of a business, property or venture by an individual or by multiple individuals (as tenants in common, joint tenants, tenants by the entirety, etc.) without the use of a partnership, S Corporation, C Corporation or LLC. Proprietorships offer no limited liability protection to its owners/proprietors. Each proprietor, tenant owner, etc. is or may be liable for all of the proprietorship’s liabilities.
- Proprietorships offer no limited liability protection to their owners/proprietors. Proprietors are or may be liable for all of the proprietorship’s liabilities. (LLC’s, S Corporations, C Corporations and limited partnerships provide limited liability protection. Proprietorships and general partnerships do not.)
- Proprietorships are owned by a single proprietor or multiple tenant owners and managed by such proprietor/multiple tenants.
- Proprietors are by definition singular individual only for sole proprietorships or multiple individuals only for tenants in common, joint tenants, tenants by the entirety, etc. (LLC’s, S Corporations, C Corporations and partnerships offer more flexibility. Proprietorships and S Corporations do not.)
- Proprietor interests may include sole proprietor interests, tenants in common, joint tenants, tenants by the entirety, etc. that are limited by the structure of ownership chosen. LLC’s, C Corporations and partnerships offer more flexibility. Proprietorships and S Corporations do not.)
- Proprietorships are managed by their Proprietors. Proprietors are or may be liable for all of the Proprietorship’s liabilities. Proprietors are protected by the “business judgment rule” against fellow proprietors for decisions made in good faith, but may be individually liable to fellow proprietors for gross negligence or willful misconduct in their actions as managers. (Proprietors may consider the procurement of directors and officers insurance coverage in order to provide additional protection to proprietors against individual liabilities.)
- Proprietorship are taxed once at the individual proprietor level based upon their ownership interests. Revenues and expenses are reported and taxed at the individual level directly through Form 1040, Schedule C.
- For any entity offering an investment opportunity to more than 1 investor, federal and/or state securities laws may apply and may require certain disclosures or registrations in connection with such an offering. Please consult a licensed attorney for advice concerning your specific circumstances.