There are 3 way of structure your business: as a sole proprietorship, a partnership or a corporation. Today we will go over the first type of business.
A sole proprietorship is an un-incorporated business with just one owner: You!
You are then responsible for paying personal income tax on the profit of your business. A small business run by one owner is the easiest and less expensive way to set up your enterprise. The government regulations are usually minimal.
There is no legal distinction between you and the business, then you are personal responsible for the business decisions, financing and debts. In case your business is not able to cover its debts you are hold to pay by the creditors. Maybe you have to declare bankruptcy.
As a sole proprietorship you are considered a self-employed (not salaried) and you need to pay taxes based on the personal rates. Good news? Any loss can be used to reduce your taxable personal income.