TAILIEUCHUNG - Gale Encyclopedia Of American Law 3Rd Edition Volume 9 P28

Gale Encyclopedia of American Law Volume 9 P28 fully illuminates today's leading cases, major statutes, legal terms and concepts, notable persons involved with the law, important documents and more. Legal issues are fully discussed in easy-to-understand language, including such high-profile topics as the Americans with Disabilities Act, capital punishment, domestic violence, gay and lesbian rights, physician-assisted suicide and thousands more. | 258 SOLICITATION Because a sole proprietorship is not a separate legal entity sole proprietors may avail themselves of certain legal rights not available to corporate officers and directors. For example a sole proprietor can raise the fifth amendment PRIVILEGE AGAINST SELF-INCRIMINATION to shield records from disclosure during a judicial proceeding. However an officer or director cannot raise the privilege to shield corporate records from being disclosed even if disclosure of those records may connect him or her to a crime. One major concern for persons organizing a business enterprise is limiting the extent to which their personal assets unrelated to the business itself are subject to claims of business creditors. A sole proprietorship gives the least protection because the personal liability of the sole proprietor is generally unlimited. Both the business assets and the personal assets of the sole proprietor are subject to claims of the sole proprietorship s creditors. In addition existing liabilities of the sole proprietor will not be extinguished upon the DISSOLUTION or sale of the sole proprietorship. Unlike the managers of a corporation or a partnership a sole proprietor has total flexibility in managing and controlling the business. The organizational expenses and level of formality in a sole proprietorship are minimal as compared with those of other business organizations. However because a sole proprietorship is not a separate legal entity it terminates when the sole proprietor becomes disabled retires or dies. As a result a sole proprietorship lacks business continuity and does not have a perpetual existence as does a corporation. For working capital a sole proprietorship is generally limited to the individual funds of the sole proprietor along with any loans from outsiders willing to provide extra capital. During his or her lifetime a sole proprietor can sell or give away any asset because the business is not legally separate from the sole proprietor. At