Company Choice: A Soul Proprietorship

750 Words2 Pages

Ben Is looking to start his own business and he has an investor; he also has some money set aside however, he does not have enough. we will be looking at the pros and the cons of going into; a sole proprietorship, a partnership, a corporation, a subchapter corporation and a limited liability company. We will then decide which one will give him the least amount of liability and the most about amount of control over the company with the investor acting only as a shareholder and not as an active member

A soul proprietorship is the most simple structure of business to create and manage. The amount of paperwork and tax reporting is also very simple; no need to worry about annual meetings, annual fees, formal financial statements are ensuring your personal and business finances are separate the government doesn’t make any separation between the money you earn in the amount your sole proprietorship Menkes which takes a lot of headache out of tax season. With all of these pros come some serious cons ,such as the fact that there is no separation between the owner in the business meaning if your sole proprietorship business loses money or is said the banks and credit loaners come straight for your personal assets you are also unable to expand there is no room for investors partners or business loans these expansions require a much more formal business structure also in the eyes of partners you are considered less legit and dependable than an LLC or Corporation therefore less people are willing to invest in your company.

Similar to a sole proprietorship a partnership can be started easily and is easy when he comes to taxes in filing each partner is taxed according to the amount of sharing the holding the business this also means profits ar...

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...s share of profits is distributed. if the members bottom line is not considered earned income because they are not active members and cannot receive the favorable fringe benefit .as a member of an LLC you may not pay yourself wages.

After looking at the pros and the cons of several different types of corporations I have found that the only two options that will work best for his type of situation is going to be either a S Corporation or an LLC. both of these options will give him limited liability with full control, allowing the shareholder or the investor to remain simply an investor however in order to enter into an S corporation or LLC both parties must be 100% in agreement. I know that when it comes time for me to start my own business I'm definitely going to be looking into starting an LLC with some type of investor, me acting as the main managing member.

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