Sole Proprietorship Essentials
Can I share ownership of my sole proprietorship with my spouse?
With a spouse you can, and that's the one difference when it comes to what a sole proprietorship is, the word sole meaning only. However, when you look at your marital unit, you and your spouse as one, and you file your taxes jointly, then the sole proprietorship is technically kind of both of yours at the same time.
What is a "business plan"?
A business plan is essentially that. It's a plan for your business. It is a set of goals, a summary of those goals, a method of achieving those goals, and it is essentially how it is that you want your business to operate. So, you start out with where you are now, you start out with where you'd like to be in the future, and you map out a path that is going to get you there. It can be a very essential document if you are trying to attract investment and, I think, even if you're not trying to attract investment. I think a business plan is very key just to gauge your own success. If you never set out or have any goals, it's going to be really tough for you to actually objectively realise that you've met them or not met them.
Do I need a business plan for my sole proprietorship?
I don't know if you ever need a business plan, but a lot of people are going to want to see one, especially if you're looking to have some outside investment or if you're trying to get a partner to join you in your endeavor. A business plan is one of those things that its not something that you must have, but its definitely something that I tell people they should try and do a really good job to put out. Its probably one of the single hardest things that you do when you're first starting out with a business, because most of the time coming up with an idea is easy and most of the time finding some company, either on-line, or finding an attorney to file some paperwork is really easy. However, taking those ideas and putting them onto a piece of paper, or into a booklet of paper that shows where you are and where you want to be and how you're going to get there is probably one of the most foreboding tasks that initial entrepreneurs are going to face.
What is a "break-even analysis"?
When a company breaks even, that's when it goes from making a loss to making a profit. It's essentially the point in time when your company goes from being a loss center to a profit center. And it's the point in time that you really need to showcase, and it's one of the things that you need to meet in a business plan if you're looking to attract or keep investors on board. So if you tell someone within the next four months, or six months, or twenty months you expect to start breaking even, that means you expect to start taking in more money than you're spending every month. And when that happens, that shows, and it's a real great indicator, that a business is going in a very successful direction.
Do I need to perform a break-even analysis for my sole proprietorship?
I think just like a business plan, you don't need one. It's something that I believe you would want. Again, I look a break-even analysis as part of a business plan; it's one part of it. You're going to be telling whether it's yourself or an outside investor: "This is when I expect to start making money and not losing money any more."And, if you have that, you have a gauge, even if just for yourself, as to whether your business is going on-track. Maybe if you need to take an overhaul of the business, or start doing something a little different, or maybe cut costs or maybe try and increase production. It's that kind of siting gauge that you want to take a look at. I think that even if it's not required, businesses without it are kind of wandering.
Can I set up a retirement plan for myself through my sole proprietorship?
I think with a sole proprietorship, seeing that it really is just an extension of you and your person, that any retirement plans or individual retirement accounts, whatever the different types and permutations, and there are so many out there, anything that you can typically do for yourself, that is how you would actually plan for your retirement as a sole proprietor. So outside of a corporation or LLC which could have a defined plan for a company, you would just have an individual plan for yourself and your family that you would use.
