Advantages Of A Sole Proprietorship

A sole proprietorship is a business that has a single owner who is responsible for making decisions for the company. A partnership consists of two people who share the responsibility of running a company. A corporation is one of the most obvious business structures and has different identities from the owners of the company. One or more owners may contribute as shareholders of a corporation.

Sole: A sole proprietorship is the easiest entity to form because it is not a legal entity and requires no paperwork. It has no separate existence apart from the owner. Legally, the business and the owner are the same. There are no costs required to set up a sole proprietorship except for usual business licenses required of all businesses. Advantages of Sole are much sole proprietorship is one-owner businesses. One person owns and operates the business and is responsible for all business dealings. He may or may not have any employees. The owner can close it, sell it or pass it down to their children at any time. A sole proprietor pays taxes as a part of his individual income tax filing. Some businesses may require licensing. The drawback of sole proprietorships is the owner 's personal liability for all debts are acquired by the business. Creditors may come for an owner 's personal assets if a small business is unable to pay debts. Sole proprietors may have difficulty obtaining business loans. Financial institutions are unwilling to offer them as many small business loans go into default when companies struggle to stay in business. Examples include writers and consultants, local restaurants and shops, and home-based businesses.

Partnerships: The Internal Revenue Service recognizes many varieties of partnerships for tax purposes. There are tw...

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...IRS are C corporations and S corporations. Advantages are Corporations may be able to raise extra funds by selling shares in the corporation, corporations may remove the cost of benefits it offers to employees and officers, and some corporations may be able to choose treatment as an S corporation, which excuses them from federal income tax other than tax on certain capital gains and passive income. Disadvantages are forming a corporation requires more time and money than forming other business structures; Governmental agencies monitor corporations, which may result in additional paperwork, and Corporate profits may be subject to greater overall taxes since the government taxes earnings at the corporate level and again at the individual level, if such profits are distributed to the shareholders. Examples are Walmart, the oil industry, general electric, and Haliburton.