Sole Proprietorship

A sole proprietorship is a business that is owned by one individual. The owner is personally responsible for all the debts of the business even in excess of the amount invested in the business. If the business operates under a name other than the individual’s name, a “Certificate of Persons Conducting Business Under Assumed Name” must be filed with the county clerk in every county in which business is transacted. The certificate must include all or the following information.

• Name under which the sole proprietorship will transact business in the county.
• Name and business or residence address of the owner.
• The county or state where business was organized, if not organized in the county.
• Nature of the entity.

Name

The county in which the sole proprietorship is filing reviews the documents submitted (which usually includes going to try your company formations registered office address, amongst other steps) and processes these if the documents meet certain standards including name availability. The proposed name of the sole proprietorship may not be available if it is misleading, confusing or deceptively similar to the name of another business entity.

Advantages

1. Easiest to form
2. Low start up costs
3. Owner in direct control

Disadvantages

1. Unlimited liability to owner
2. Lack of continuity
3. Difficult to raise capital

Copartnership

A copartnership is a legal entity that is jointly owned by two or more persons. The owners are personally responsible for all debts of the business, even debts in excess of the amount they invested in the business. Generally copartners enter into a written agreement governing the copartnership and an attorney should be consulted to prepare such an agreement. When forming a copartnership a “Certificate of Copartnership” or a “Certificate of Persons Conducting Business Under Assumed Name” must be filled with the county clerk in all the counties in which the business is to be conducted. The Certificate of Copartnership must include all the following information.

• Name under which the copartnership will transact business in the county.
• The term of the copartnership.
• Name and business or residence address of the partners.
• Nature of the entity.

The county in which the copartnership is filing reviews the documents submitted and processes these if the documents meet certain standards, including name availability. The proposed name of the copartnership may not be available if it is misleading, confusing or deceptively similar to the name of another business entity transacting business in that county. If the copartnership is to operate under one or more names other than its true name, it may also file those assumed names, pursuant to P.A. 101 of 1907.

Changes in Business Structure

After the initial “Certificate of Copartnership” or “Certificate of Persons Conducting Business Under an Assumed Name” has been filed, change may occur which will require the filing of additional documents such as change of name or address. These changes are filed with the county clerks office where the original document was filed. If you are doing business in more than one county, you would need to file this information in each county where you originally filed.

Advantages

1. Relatively east to form
2. Low start up cost
3. Partners can provide additional capital
4. Broader management voice

Disadvantages

1. Unlimited liability to owners
2. Lack of continuity – terminates on death or withdrawal of partner