California Sole Proprietorship San Diego
California Sole Proprietorship San Diego Summary
Operating a business as a sole proprietorship is an easy, inexpensive way to start a business, but the sole proprietor is subjected to the following risks and disadvantages:
- Unlimited personal liability against claims from lawsuits and creditors against the sole proprietorship;
- Business liabilities discharged only through the personal bankruptcy of the sole proprietor;
- Raising capital from investors is not allowed; all funds must be contributed or borrowed by the sole proprietor;
- All net income is subject to SECA self-employment taxes in addition to federal and state income taxes.
Despite the risks and disadvantages, a sole proprietorship can be the best form of doing business in certain circumstances. Contact San Diego Corporate Law for a consultation for help deciding if a sole proprietorship is appropriate for your business.
Sole Proprietorship Questions?
Send us an Email or call us at 858.483.9200
Michael J. Leonard helped us obtain our 501(c)(3), created our bylaws, and completed all of the necessary forms to establish a tax exempt status for our non-profit foundation. He was professional, quick, and great to work with. Mr. Leonard is also very connected in the community and has referred us to useful contacts.
Michel Sproles, Sproles Empowered Youth
My experience working with San Diego Corporate Law has been nothing short of excellent. Michael Leonard is a tremendous asset, and provided us much needed assistance when forming our insurance agency. He assisted with the formation of our corporation, buy / sell agreement, company bylaws, minutes, and stock certificates. Michael is an utmost professional that I would refer to any friend or client.
Michael Fusco, Fusco & Orsini Insurance Services, Inc.
Michael J. Leonard at San Diego Corporate Law has provided GWR valuable assistance and professional advice. As a San Diego based high tech equipment manufacturer, we appreciate that we never have to waste his or our time explaining the engineering or scientific details of our situation as his strong, hands on physics and engineering background is invaluable. We are well protected with Mike looking out for our interests.
Richard Reineman, GWR Instruments, Inc.
In 2009 San Diego Corporate Law converted my Sole Propriety Engineering Company into a “S” Corporation. My experience was painless and Mr. Leonard has done an excellent job staying in contact and continues to be a great advisor. San Diego Corporate Law comes highly recommended.
Curtis Patterson, P.E., Patterson Engineering, Inc.
Michael J. Leonard at San Diego Corporate Law is not your typical attorney experience. Michael puts his full attention into understanding your needs and provides the best solution to meet your goals. I highly recommend San Diego Corporate Law to any of my friends and associates.
Jeff A. Mudd, Best-Rate Repair Company, Inc.
Working with San Diego Corporate Law made dealing with all the paper work of incorporating and setting up my business a dream! Michael is the ultimate professional and knows corporate law inside and out! San Diego Corporate Law is always available to answer questions, assist me with follow up items, and be my go-to and support team.
Elloise Bennett, AP Test Service, LLC
Mr. Leonard is competent, dependable, and gets the work done on time and within budget. He is very responsible to his customers. We would recommend him to anyone that requires a true professional.
Lidija Skolnija, anaZana, Inc.
I was recommended to Michael to help me set up a new corporation I was starting. The advice he gave me was great, and I eventually hired his services to create the agreements and contracts between myself and my business partner. Throughout the process he guided me and asked very detailed questions. I felt that he had my back and my best interest at heart. Looking back now, the contracts he wrote have saved me close to $40,000 in money that I would have otherwise had to pay. Thank you Michael. Everyone should follow your standards.
Jason Delfos, Marketing and Advertising Design Group, LLC
We hired San Diego Corporate Law to help us establish our business in San Diego. In the initial stages of setting up our business and transitioning to California, we were frequently out of town. During this time, Michael answered questions promptly and thoroughly by phone and email. He went above and beyond to keep us on deadline for our aggressive schedule. I would not hesitate to recommend San Diego Corporate Law to another business owner.
Alicia Sorber-Gallegos, Two Men and a Truck
Having no prior experience with business law, I approached Michael to help me set up an LLC for my new company and help me review my legal disclaimers. Michael was very straightforward, honest and helpful. He took the time to explain every detail and answer all of my questions. His work was very diligent and completed exactly by the deadline promised. Michael and San Diego Corporate Law hold my highest recommendation!
Anton Ivanov, Dreams Cash True
Michael J. Leonard helped me configure my business entities into a solid investment vehicle. He is very professional, knowledgeable, easy to reach and timely. San Diego Corporate Law produced a unique and informative Private Placement Memorandum (PPM) for my business for less than half the cost other law firms were charging. I expect to use the PPM and San Diego Corporate Law for many years. I recommend Michael because of his efficient, hands on, practical approach to legal work in a time of dramatic changes with securities laws (JOBS Act).
John Copyak, Clean USA Power, Inc.
San Diego Corporate Law helped me set up MGIV Inc and get established as an S-corp in 2013. I was a one man show and didn’t have a substantial amount of money to spend to get started. I was in the process of filing for a LLC through Legalzoom.com when something didn’t feel right. I picked up the phone and asked Michael if he was available to help. This was my first business so I knew nothing about filing for a corporation or legally establishing a business. Using his knowledge and expertise he coached me toward filing for an S-corp instead of an LLC. It saved the corporation $800 in 2013 and positioned it for success based on the MGIV Communication Consulting model. I find comfort knowing that my business is in good hands. Michael is a great resource and very personable so working with him is convenient and affordable! I recommend San Diego Corporate Law to anyone needing legal assistance with their business!
Michael Gordon IV, MGIV, Inc.
When I needed to move my business from an office suite to a brick and mortar location, San Diego Corporate Law was instrumental in ensuring that the lease provisions were in my best interests. The specialized skills that Michael and his team possess, the fair and transparent fee structure, and their professional yet low pressure consultation process are the reasons why I will retain their services in the future.
Scott Weathers, Alpha Graphics La Jolla
Michael J. Leonard at San Diego Corporate Law not only helped us establish our small business in San Diego, but he helped us to solidify our partnership to avoid any gray areas as we are a family-run business. Michael was easy to work with, knowledgeable, responsive, and professional, and we will continue to use him as our company lawyer moving forward.
Karen Posner, Camp Run-A-Mutt Sorrento Valley
I have nothing but compliments to say about San Diego Corporate Law. Michael and his team have always delivered not only an extremely high level of service, but also have been so patient through the whole process of setting up our LLC. Whenever I have questions or need their service, they are very easy to communicate with and very reasonably priced. I will not only use them for any legal advice that I may need in the future, but also refer all the people that may also need their services.
Andrey Kamogari, Kamo Housing
Michael assisted us with the process of incorporating our non-profit organization. Michael was responsive to all of our questions, and sensitive to the expedited timelines that we encountered. Among the best aspects we experienced in working with Michael was his appreciation for our specific goals and his candid and honest guidance to accomplish those objectives. I would highly recommend Michael Leonard and San Diego Corporate Law.
Esther Hemmen, Mending Matters
San Diego Corporate Law has been a crucial partner for Little Black Diamond. Whether it’s routine incorporation paperwork or complex employment law, Michael is always very responsive and available to help handle our legal issues. He takes the time to understand your business and the unique issues that surround it in order to provide accurate and timely advice that considers the best interest of your business. San Diego Corporate Law is a true partner for any business.
Adam Rosenberg, Little Black Diamond, LLC
California Sole Proprietorship San Diego Details
A sole proprietorship, where an individual engages in business personally, is the simplest form of business organization. Since a sole proprietorship is an individual personally engaged in business, a sole proprietor may not have co-owners or investors (if more than one owner is involved, and those owners are not a married couple, the business is a partnership). A sole proprietorship avoids most of the formalities and reporting requirements of a more complex business entity, such as an S-Corp or LLC; however, the sole proprietor is personally liable for the debts and obligations of the business, and the entire net income (up to the statutory maximum) is subject to self-employment tax (SECA), in addition to federal and state income taxes.
No legal business is restricted from operating as a sole proprietorship, thus attorneys, accountants, architects, and medical professionals may also offer their professional services in a sole proprietorship.
AA sole proprietorship does not involve registration with any governmental agency, but instead is automatically created when an individual engages in business personally. Local municipal government business licenses (called a Business Tax License in the City of San Diego) and a fictitious business name statement (commonly referred to as a DBA, which stands for “doing business as”) may be required. If a fictitious business name is used, a sole proprietor must file a DBA on behalf of the sole proprietorship in the county of the principal place of business. California Business and Professions Code § 17915. A sole proprietorship may also file a DBA in any other county. Id. The filing fee is currently $44.00 in San Diego County. Periodic renewals of registrations are required every five years in San Diego County.
The debts and obligations of a business operated as a sole proprietorship are unlimited and personal to the sole proprietor and potentially only capable of being discharged through the personal bankruptcy of the sole proprietor. Alternatives that provide limited liability for debts and obligations that are not personal to the business owner include the use of a corporation, S-Corp, or LLC.
A sole proprietorship is generally managed by the sole proprietor. However, a sole proprietor may hire employees, including one or more managers..
A sole proprietorship is funded with the personal cash and property of the sole proprietor and/or one or more loans personal to the sole proprietor. The sole proprietor is personally liable to repay any loans taken out in the name of a sole proprietorship.
Without the ability to raise capital through the sale of equity or debt instruments, a sole proprietorship does not present securities issues.
Income and expenses of a sole proprietorship are reported on Schedule C of the personal tax returns of the sole proprietor. Internal Revenue Code §§ 61(a), 62(a); California Revenue and Taxation Code §§ 17071-17072. The sole proprietor does not take a salary but instead takes a draw against the profits of the sole proprietorship. The net profit of a sole proprietorship is subject to federal and state income tax and self-employment tax (SECA) up to the statutory maximum self-employment tax liability. Employment taxes and workers’ compensation insurance must be paid on employees’ wages.
When a sole proprietorship ceases to operate, it terminates. The assets and liabilities of the sole proprietorship can be sold, which also causes the sole proprietorship to terminate. When a second owner is added to a sole proprietorship, the business automatically becomes a partnership unless a different business entity, such as a corporation, S-Corp, or LLC is formed.
A sole proprietorship terminates when the sole proprietor discontinues the business by winding up any pending obligations and completes all required tax filings and related matters.
Sole Proprietorship Questions?
Send us an Email or call us at 858.483.9200