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Simple English definitions for legal terms
Proprietor
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A quick definition of Proprietor:
A proprietor is someone who owns something. It can refer to the owner of a business called a sole proprietorship, which means one person owns everything and is responsible for all the debts. This type of business is easy to start and doesn't require any special paperwork. The proprietor has complete control over the business and gets to keep all the profits, but also has to pay for any losses or debts. They also have to pay taxes on the business income as part of their personal taxes.
A more thorough explanation:
Proprietor refers to an owner, someone who legally and exclusively owns something. For example, the proprietor of a store is the person who owns the store.
A sole proprietorship is a type of business where one person owns all the assets and assumes all the debts of the business. For example, if someone starts a small business selling handmade crafts, they might choose to operate as a sole proprietorship. In this case, the proprietor is the only owner of the business and is responsible for all aspects of it.
The proprietor of a sole proprietorship has full control over the business and is entitled to all profits. However, they are also subject to unlimited liability for all losses, debts, and liabilities of the business. This means that if the business incurs debt or is sued, the proprietor is personally responsible for paying those debts or damages.
There is no separate income tax to be paid for a sole proprietorship. Instead, all profits and losses are reported on the proprietor's personal tax return.
John runs a small landscaping business as a sole proprietorship. He owns all the equipment and is responsible for all the debts and liabilities of the business. He has full control over the business and is entitled to all profits. However, if the business is sued or incurs debt, John is personally responsible for paying those debts or damages.