Authors: Greg McKee, North Dakota State University, gregory.mckee@ndsu.edu, and Donald Frederick,
Rural Business-Cooperative Service, USDA
The individually owned business is the oldest and most common form. One person owns, controls and conducts the business. Characteristics of individually owned businesses include:
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- Control. The owner is responsible for management, makes all the major operational decisions and sets the business policies.
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- Capital. The owner supplies the equity and is responsible for all debts.
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- Earnings. Profits belong to the owner.
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- Taxes. Profits are taxed once, as income of the owner.
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- Life. The life of the individually owned business is tied to the one owner. It continues until the owner sells the business, retires or dies. At that point, the business is either taken over by a new owner or discontinued.
Many farms are operated as individually owned businesses. Other examples of business commonly operated by an individual owner include service stations, hardware stores, restaurants, flower shops and dry cleaners.