- Legal vs tax
- Not a separate legal entity. Federal tax is on the owner's Form 1040, typically Schedule C, with self-employment tax on net earnings.
- Liability
- Personal assets are generally exposed to business debts and claims.
- Default federal tax
- sole proprietor
- Other federal options
- —
- Formation / maintenance
- Often none at the state entity level. Local licenses and a DBA may still apply.
- Public-record notes
- There is usually no statewide ownership filing. That is not privacy planning — there is also no liability boundary.
- Succession
- The business does not survive the owner unless assets are moved into another structure.
- Investor fit
- Poor for outside equity. Investors expect an entity.
Disqualifiers
- Needs limited liability
- Needs outside investors
- Needs payroll-style officer compensation
Professional review: cpa, insurance.
Related: dbasingle-member-llc