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SOLE PROPRIETORSHIPS IN MASSACHUSETTS

Please note that the following should not be construed as legal advice. We invite you to contact us if you are looking for a
Boston corporate lawyer. We strongly encourage you to speak to an experienced attorney about your business formation
issues. You can contact us if you are looking for a Boston corporate lawyer by visiting our current website at
SMLawGroup.com.

Sole Proprietorship

A sole proprietorship is a person engaged in business for himself or herself. A sole proprietor can engage employees to carry
out the business.

Requirements for Formation

No statutory requirements govern the formation of a sole proprietorship. However, if the sole proprietorship is doing
business under a name other than that of the sole proprietor, a business certificate must be filed in every city or town in
which an office of the business is located. In addition, a sole proprietorship is subject to the laws, if any, governing the
business in which the sole proprietor is engaged.

Control and Management

The sole proprietor is solely responsible for the control and management of the business, except to the extent that he or she
delegates control or management to others. To the extent that the sole proprietor surrenders authority to others, those
participants in the business generally are agents or employees of the sole proprietorship. Note that the sole proprietor may
be liable for the acts of his or her agents or employees, whether the authority granted to them is formal and actual or merely
apparent to third parties.

Liability

The sole proprietor is fully liable for the obligations of the business
to the extent of his or her personal as well as business assets. The
unlimited liability inherent in this form of business organization can be ameliorated somewhat by the acquisition of insurance
to protect against certain risks. However, the sole proprietor's homeowner insurance may exclude liabilities incurred in the
course of a business transaction; therefore, additional riders or policies may be required.

Continuity of Existence

Technically the sole proprietorship dies with the sole proprietor.
However, there are exceptions to this rule.

Transferability of Interests

The sole proprietor's interest in the business is not represented by a
certificate or other evidence of ownership but rather by the proprietor's interest in the assets of the business. Transferability
of the business is accomplished by the conveyance of these assets, which are freely transferable subject to applicable laws.  

Federal Taxation

All items of income, loss, deduction, credit and gain of the business are included in the federal income tax return of the
proprietor and are taxed at the proprietor's marginal tax rate. The sole proprietorship is not a separate legal entity for
federal income tax purposes and, therefore, is merely a conduit through which these tax items flow to the proprietor;
however, it is important that the sole proprietor carefully document business expenses, as opposed to personal or
investment expenses, since certain expenses that are personal are not deductible as such but are deductible if they relate
to carrying on the business. The taxable year of the proprietor (usually the calendar year) is automatically the taxable year
of the proprietorship.