Sole proprietorship

[2] The sole trader receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.

The owner carries the financial responsibility for all debts and/or losses suffered by the business, to the extent of using personal or other assets to discharge any outstanding liabilities.

[5] The owner is exclusively liable for all business activities conducted by the sole proprietorship and, accordingly, entitled to full control and all earnings associated with it.

[12] Sole proprietors must register with the Royal Malaysian Customs Department to charge and collect goods and services tax (GST) once their taxable turnover within a 12 month-period exceeds RM500,000.

[18] Sole traders in New Zealand must notify the Inland Revenue Department that they are trading and must register for Goods and Services Tax purposes if their income exceeds $60,000 per year.

When starting up, sole traders must complete a straightforward registration with HM Revenue and Customs as self-employed for tax and National Insurance purposes.

Business analysts may advise sole traders to form a limited company in order to access greater levels of financing, for example for expansion plans.

It can also be the case that within certain industries, it is easier to secure work if presenting potential business partners with a limited company structure.

They are not classified as partners in the enterprise, or an independent contractor, enabling the business to retain its sole proprietorship status and not be required to submit a partnership income tax return.

[25] The setting-up process of a sole proprietorship to comply with local laws and regulations, is obtainable from the Small Business Development Center (SBDC), using their locator facility.

A sole proprietor must be prepared to devote their time, utilizing business methods towards establishing a sound and appropriate foundation.

[28] Sole proprietors are able to finance legitimate operating expenses; for example, working capital, furniture, leasehold improvements and building renovations.

Many and varied private organizations and individuals seek opportunities to invest and fund a business that may not qualify for traditional financing from institutions, such as banks.

For the sole proprietor seeking to take advantage of this facility, there are various factors that must be understood and adhered to regarding the loan application.

[29] According to the SBA, there are various private organizations prepared to fund sole proprietor business operations that do not qualify for traditional financing from banks.

These private investors can provide loans, credit lines, leasing facilities for equipment, or other forms of capital, to sole proprietorships that have exhausted alternative financial resources.

To assist sole proprietors, there are business grants available from the Federal Government or private organizations, providing certain criteria are met.

The Small Business Administration specifies that all credit reports received from any source should be carefully reviewed to ensure that all relevant personal information is correct.