SOLE PROPRIETORSHIP:
Sole proprietorship is an independent business owned by one individual. Sole proprietorship businesses are relatively small and in most cases the financial resources of one person are adequate to cover operational expenditure.
Characteristics of Sole Proprietorship
1. Simplicity – Starting a sole proprietorship is quiet simple. The only legal formalities are applying for the required state or local license or permit. If the sole proprietor wants to operate the business under a different name other than his, then a special filling certificate is needed.
2. Control – The sole proprietor has unlimited powers and responsibilities. The destiny of the company ultimately depends on the owner and therefore makes all major decisions. Also the sole proprietor manages all major functions such as financial and sales.
3. Convenience – The sole proprietor is his own boss. He does not report to anybody when making company decisions. No third party or outside criticism/disapproval if wrong choices are made. No business charter from the state, or company regulations to regulate or reduce his authority. The sole proprietor can at his own will, expand the business operations, give it out on contract or outsource it. He can seize/ignore business opportunities, sell or liquidate the business or even relocate to another place.
4. Profit Retention – All profits of the business are personal income to the sole proprietor. There is no partnership to share profits, and there no shareholders to claim dividends. Other profit in the form of donations, gifts, etc.
5. Taxes – The sole proprietors and his business are taxed as a single-unit. There is no separate federal income tax reporting (pass-through taxation) and ...
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4. Profit – Limited Liability Companies have flexible distribution of profits. Unlike common partnership where profit is shared equally, LLC have much more flexibility.
5. Taxes – LLC can decide to be taxed as a sole proprietor, partnership, S-corporation or C-corporation, providing much flexibility and choices known as “check-the-box taxation”. Under the default tax classification, profit is taxed at the membership level and not at the LLC level (non-double taxation)
6. Liability – A LLC exist as a separate entity much like a corporation. Owners of a LLC, called “members” are protected from the liabilities and debts of the corporation and so cannot be held personally responsible unless they have signed a personal guarantee. On the other hand, LCC has a limited life, i.e. the company will be dissolved when it goes bankrupt or a member dies.
Capital is a major factor for decision making. Since the business involves a group then the three forms of business exposes the group to a greater capital availability. The liability of members is also an important factor. The partnership offers unlimited liability to the members of the partnership while the corporation and Limited Liability Company allows the members limited liability and thus their personal assets cannot be interfered with in the event of a liability. The decision making process is for the business associations but the input of all members results to the making of good and informed decisions. Finally, the taxation practices for various forms of associations informs the decision. Corporations are often taxed twice whereas the LLC and partnership business is taxed
The owner reports business gain or losses on his or her personal income tax return. A sole proprietor is taxed on all assets from the business at appropriate personal tax rates. The corporation income, and acceptable expenses, is reflected on the person’s tax return. All corporation income is taxed to the owner in the year the business acquire it, whether or not the owner take away the money from the business. No disconnect federal income tax return is acquired of the sole proprietor.
A sole proprietorship is characterized a business in which one individual (sole proprietor) controls the administration and benefits (Kubasek, 2014). A sole proprietor is the single individual at the leader of
Being the owner of LSU, Joe probably operates as a sole proprietor. It is recommended that the business change its entity selection to limited liability company (LLC). The main advantages to an LLC are the protection the LLC owners receive from business creditors, and the fact that the owners can still participate in the management of the business.
A proprietorship is also known as sole-proprietorship is a business which is owned by a single individual. Although the proprietorship is easy to get into, in most of the state, even the smallest business in HCO needs to be registered and licensed by the state. This form of organization is easy to form with limited resources and is subject to few governmental regulations
A Sole Trader is a business that is owned by only 1 person. They are
There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.
A sole proprietorship is a business entity formed by an individual, and are the most common and simple form of business structure. The owner is responsible for all of the control, liability, and management of the business. Although the business owner gets all the profits from the business, they are personally liable for all debts incurred by the business. Because the sole proprietorship is merely an extension of its owner, it has no life apart from its owner. It is not a legal entity; therefore, it cannot sue or be sued. Creditors must sue the owner and vice versa. There are no formalities necessary when creating a sole proprietorship. By simply not choosing another business form or structure, the person going into business by himself automatically creates a sole proprietorship by default. The business name simply needs to be registered with the state.
Sole proprietorships are typically businesses that have one owner. There many advantages to operating a business as a sole owner. One of those advantages is that it is fairly easy to form. When operating a sole proprietorship, filing an independent tax report for your business is not mandatory. It is optional for the owner to hire employees to help run the business. The owner is in charge of making all business decisions and transactions. Sole owners have the ease of selling their business, closing it or giving it to his heirs. While opening businesses sometimes require you to obtain a business license, sole proprietorships are typically less expensive than others. Also, it is often less expensive to start a sole proprietorship.
The definition of a sole proprietorship is essentially a business that is run by one person and owned by that person as well. Specifically, a sole proprietorship is separated from the other business entities because of the specific the legal dynamics between the business and the owner of the business. Moreover, because of this factor, sole proprietorships are usually easy to both form, maintain as well as dissolve if need be. In a New York Times article, the authors expressed that small businesses are typically sole proprietorships and as such, this is why it was selected as the business entity (1). Furthermore, the aforementioned reasons allowed for a rather rapid decision on the basis that with this entity, there is an ability of the owner to run it how they see fit.
Sole Proprietorship can be defined as the simplest form of business organization. This form is the easiest form of ownership where that individual would be in complete control. The individual would be able to make decisions as they see fit along with the right to keep all profits from their business. Now this can be a great decision based upon the business one is running and how successful it is turning in customers and orders. One great advantage with retaining there profits would be automatically be entered into that individuals tax return when the time comes. This is a great tool to not only save time but get a little extra back when February comes along.
There are many different types of business structures, but if you own and operate a business that it is a sole
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
Sole Trader is a business that is owned and run by one person. This is why they call it a sole trader business. A sole trader sets up their own business with their savings and usually a loan from the bank. A sole trader usually will operate the business by themselves or with help from family. If the sole trader’s business succeeds then he or she get all the profit but if it fails and he has lot of debt then he would have to sell out all his personal possession’s like his car and house and the contents that is worth money to pay of his debt because being a sole trader you have unlimited liability.
Limited Life: In many jurisdictions, if a member departs the LLC, the LLC ceases to exist. This is unlike a corporation whose identity is unaffected by the comings and goings of shareholders. Members of LLCs can combat this weakness in the Operating