Offit Kurman business law and transactions attorney Michael Mercurio was a recent guest on AHA Business Radio on Baltimore’s WJZ AM 1300, CBS Radio. AHA Business Radio, hosted by Allan Hirsh, seeks to provide listeners with useful information to help them run their business and guide decision making. And who better to help listeners than principal and chair of the business law and transaction practice group of Offit Kurman Attorneys at Law?
“Business law, when you work with businesses every day, is something that could be an employment issue, it could be a contractual issue, it could be an issue with a partner, it might be tax issue or an intellectual property issue, so it keeps the practice of law very exciting and very engaging,” explains Mercurio. “And, that’s what I really like about it.”
Mercurio and Hirsh discussed business entities from sole proprietorships to C corporations and S corporations. Over the next several weeks, we are going to touch on each of these areas, starting with sole proprietors.
Opportunities and Issues that face Sole Proprietors
Sole proprietorship is the most basic form of business.
“So, with a sole proprietorship, there is no distinction, no division between the individual, the person that may be behind the business, and the business itself,” explains Mercurio. “They’re one and the same, and that is the strength, one of the strengths of the sole proprietorship, it’s very easy.”
There’s nothing you have to do to set up a sole proprietorship. You don’t have to file anything with the state; you don’t have to fill out any paperwork. The sole proprietorship comes into existence by virtue of engaging in a business proposition.
“Because it’s not a formal entity or formalized entity, there are liability concerns,” explains Mercurio.
Because there is no division between the person and the business, you’re personally liable. Any liabilities, obligations, responsibilities of your business become your personal responsibilities.
“So, that’s a big draw back from a sole proprietorship,” says Mercurio.
Oh course, everything changes when a sole proprietor starts hiring employees…
“Once…you start to hire people…you now have to perhaps withhold taxes, you may have to pay into the unemployment compensation fund, and to do other things that are more formalized and structured that you didn’t have when it was just you and the business, and there was no distinction between you and the business via the sole proprietorship,” explains Mercurio.
Check back next week as we continue our discussion on business entities.
Meanwhile, if you have any questions regarding Sole Proprietors, please contact Offit Kurman business law and transactions attorney Mike Mercurio at:
firstname.lastname@example.org | 301.575.0332
Mr. Mercurio has worked with companies in cyber security, intelligence, information technology, recycling and waste management, government contracting generally, health care, mortgage and financial services, franchising and restaurant and food services.